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100 sats \ 0 replies \ @SimpleStacker 29 Aug \ on: LQWD Claims 24% Annualized Lightning Network Yield lightning
On a simple aggregate basis, assuming all the 19.75 BTC deployed had been active from day one, the test reflected an APR of approximately 2.5%. That baseline offers a conservative view, however the weighted result of 24% more accurately reflects how efficiently deployed BTC is working on LQWD's infrastructure.
I can't tell what that means.
This should be a simple calculation. For a 24 day testing period, you shoudl be able to approximate annual return with:
\frac{\text{Fees generated from external channels}}{\text{BTC locked up}} \times \frac{365}{24}
It would be an optimistic estimate I suppose, because it doesn't account for costs associated with liquidity management once channels get depleted, nor does it account for other infrastructure and operational costs. It also doesn't account for monthly compounding, which would lower the APR further, since routing fees don't compound
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