Jones APY Explained

Jonesies - today we’ll be exploring annualized and historical APYs (annual percentage yield) and how you should interpret the results of vaults that are released monthly (updated at each new epoch).

Jones APY Explained
Professor Jones leading a lecture on APY

Introduction

Jonesies - today we’ll be exploring annualized and historical APYs (annual percentage yield) and how you should interpret the results of vaults that are released monthly (updated at each new epoch). We want to ensure that our community and depositors fully understand the yields that they’re receiving when participating in jAsset vault epochs.

Vault Yields & Annualized Figures

Our strategists are long-term oriented and seek to maximize user yields over the course of a given year. Sometimes this requires changing allocations or strategies in earlier epochs to generate stronger yield in later epochs. This, along with general market conditions and volatility, creates some variations in performance and the APYs displayed on our Vaults page.

The APY displayed on our vaults page represents the average of historic monthly returns of the vault, compounded monthly over one year to give an implied annual percentage yield. For example, if the average monthly performance of a vault was a 2.25% yield on the underlying jAsset, the APY displayed on our vaults page would be 30.6% (1.0225^12).


Conversely, in the case of a change in strategy or adverse market conditions, a nearly flat or negative yield could occur. In the case of a -2.25% yield, the APY displayed by our vaults would be -23.89% (0.9775^12). In this case, it is important to note that depositors did not lose 23.89% in one month. This is simply the implied annual performance of the vault if this yield continues to be the norm, a norm which is not in the best interest of vault participants or the strategists.

Interpreting Performance

Remember, our strategies change and react to market opportunities and conditions. The performance of a vault in any given epoch is never guaranteed to be the norm. We encourage viewing the performance of Jones DAO on an aggregate level. Longer term, multi-epoch time frames will give prospective depositors the best picture of the performance of our strategists. We will be releasing consistent epoch reviews to explain performance and will always provide opportunities for our community members to ask questions.

Conclusion

Our vaults page provides annualized performance figures based on the latest available data. Properly interpreting this data as well as considering performance across multiple epochs is important as a vault depositor. Be sure to reach out in our Discord if you have any additional questions about how our performance is calculated.



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