YFI P/E Calcualtion
Update:
July 16, 2021
So, here’s an update on YFIs current PE ratio and a demonstration of how to calculate this yourself.
Logris the Bard
For anyone living under a rock there are a bunch of competing platforms for pooled liquidity farming. Yearn Finance was the first, arguably the most professional, and definitely still the largest of these platforms. Yield opportunities are always shifting. If you’re like me, you find the time to keep up with all the various opportunities out there, and migrate your funds to maximize your yield. If you’re a person who doesn’t want to yield optimization to be your part time job Yearn is your friend. They create a pool for various assets, stake the funds of each pool in a risk-balanced pie chart, collect rewards, convert them back to the asset you deposited, and take a fee for everything they do.
They do a lot. Someone has to write all that solidity, they have to pay for audits, maintain a website, a multi-sig has to authorize each harvest, someone is always on pager duty in case anything goes wrong, etc.
They pay for this with some fees:
Vault v.1
Vault v.2
Let's Break Down the Types of Fees
Withdrawal fee
These are fees applied when someone exits a vault if there aren’t enough idle funds to handle the withdrawal.
YTD Withdrawal Fee: 8,232,199-6,505,529=1,726,670
This is over 196 days, so projected annual income from withdrawals of $3,282,471. Honestly I don’t even think it’ll get that much. This revenue will go to 0 over time since it only applies to v1 vaults.
Performance Fee
These are the fees taken by the platform on each harvest. Half of these fees go to the treasury, the other half pay the strategy creator. Seems fair to me.
What I don’t have is a dashboard that shows historical income for each vault (let me know if you find one) so I just have to estimate this using the % yield on each vault and the vault AUM.
You can pull this data from yearn.fi or from yearn.finance. On yearn.finance the APY listed is after all fees. To get the breakdown you have to mouseover the rate. From there take the gross rate and apply the fees to it to get the investor rate shown. The APY listed is an average of the last 7 days which I know is short but I don’t have a dashboard to show historical trends of harvests YTD or something longer term. Here’s a spreadsheet I collated from that data.
Total AUM: 2.184B
Total Performance fee: $32,638,200.36
Management Fee
Basically they siphon 2% of the total AUM annually from the normal vaults. This scales linearly with v2 vault TVL.
You can see a graph of Yearn TVL here. That includes the CRV rewards which don’t have management fees but its an excellent resource for monitoring YFI adoption. V2 vault AUM from above is $2.184B. Excluding the YFI and boost vaults from this you get a management fee of $2,523,059.49.
Locked CRV Fee
These fees don’t go to the platform. Instead they go to people who lock CRV in their boost vaults. This is similar to the Convex Finance fee to Curve depositers. Now IIRC there was several million CRV donated to the backscratcher vault by the treasury that I’m not sure whether to count as platform revenue because it would largely depend on whether the treasury can actually withdraw that deposit.
For the record, I calculate those fees to be 24M distributed to stakers in the boost vaults.
Putting these together we get a total projected revenue of 35.16M at current TVL and rates.
YFI market cap: $1,019,151,560
P/E: 28.99
Total P/E for Yearn
Want to CALCULATE p/e yOURSELF?
If you want to do a lazy estimation for yourself, here’s an official accounting dashboard. Now this site does a revenue projection of everything from the past 30 days but it doesn’t break it down by source. Right now on July 16’th the 30d revenue projection is 4.18M which implies a total revenue of 50.85M. I hope this is the difference between 7day rate projections on current TVL and projections from 30 day . It’s certainly a lot more work to do it my way. Neither approach is accounting for DAO expenses which I have no estimate of.
To continue my DCA I’m waiting to see their TVL stop falling. It’s been in decline even after normalizing for asset prices which basically indicates a loss of market share to Convex and people staking independently because of falling rates and a lack of Yearn support for new yields such as the Kyber DMM farming, Uniswap v3 pools, mStable, saddle for Alchemix, etc.