How Dyson’s Dual Investment Returns Calculated? 2 Yield Sources You Should Know
Dual Investment is a popular structured product on centralized exchanges (CEXs). Many investors are attracted to Dual Investment to earn additional yield while holding their favorite crypto assets.
However, the lack of transparency in centralized Dual Investment products poses a significant issue, as if they were investing in a black box. The processes, calculation formulas, and capital flows are completely opaque, and users are unaware of the commissions deducted by the CEX from their returns.
Also, DeFi sometimes lacks transparency in yield calculation and promises unsustainable returns as well. To the point that the following expression has been coined:
“If you don’t know where your yield comes from, you are the yield.”
To address these concerns, Dyson Finance introduces decentralized Dual Investment, which offers several advantages for retail investors:
- Transparent on-chain fund flows and return formulas
- Higher APR due to the elimination of brokers
- Additional $DYSN rewards
This article aims to provide you with a comprehensive understanding of how to calculate the APR of Dual Investment products on Dyson Finance, enabling you to maximize your profit opportunities and effectively control risks.
How Are Dual Investment Returns Calculated on Dyson Finance?
The income from Dual Investment on Dyson Finance comes from two sources:
- Premium of Dual Investment: As Dual Investment is a structured product of options, this yield is derived from the option’s premium, which is determined by the volatility of the token pair and the chosen lock-in period.
- Prime Rewards (Extra $DYSN Yield): Dual Investment users who have joined the Membership Program and registered their addresses as members can receive additional $DYSN rewards while investing.
Let’s explain them in more depth below.
Yield Source #1: Premium of Dual Investment
When investors use Dual Investment, the longer they lock their assets in a pool, the higher returns they will receive after the maturity date. The formula below represents an approximation formula of the Black-Scholes model, which is used to calculate the premium of options:
basis is the volatility of the token pair, which will be determined by the governance votes. After the maturity date, investors can redeem (1+premium) times the assets they have deposited. The redeemed token will differ from the prices.
Yield Source #2: Prime Rewards (Extra $DYSN Yield)
Dyson Finance conducts the Membership Program as an invite-only liquidity mining mechanism, designed to distribute $DYSN governance tokens to the most valuable members.
Once registered as a member in the program, not only receive additional returns when using Dual Investment but also earn ongoing referral bonuses. For more information, please refer to the article ”Membership Program on Dyson Finance”.
Whether or not investors participate in the Membership Program can have a significant impact on their earnings. Let us demonstrate how to calculate the APR under various scenarios.
Scenario — Rewards With VS Without Referral
Jack makes a 1000 USD deposit into the Dual Investment for a lock-up period of one day, with a premium of 1.0% (ROI). This means that he may receive an extra 10 USD at maturity. The size of the premium is calculated using the formula mentioned above.
If Jack does not join the Membership Program, the total earnings from this investment would be $10. The calculation method for Premium APR is as follows:
Premium APR = (10/1000) × 365 × 100% = 365%
However, if Jack joins the Membership Program, it means that in addition to the $10 premium earnings from Dual Investment, Jack can immediately receive additional Points to exchange for $DYSN.
Assuming the value of $DYSN earned from this investment is $5, as this income is received at the time of investment without waiting for the lock-up period, it can be deducted from the investment cost. In this case, the calculation for Premium APR is as follows:
Premium APR = (10/(1000–5)) × 365 × 100% = 366.83%
In addition to the premium earnings, the $DYSN APR can be calculated for the additional $DYSN rewards. The calculation for $DYSN APR is different from the Premium APR, as it requires the concept of zero-coupon bonds and only considers the investment cost and principal, without considering the size of the premium.
In this example, the investment cost is ($1000 — $5), and a part of the principal, $1000, can be retrieved upon maturity. Therefore, the $DYSN APR is calculated as follows:
$DYSN APR = ((1000/(1000–5)) — 1) × 365 × 100% = 183.41%
Taking into account both income sources, the Total APR is:
Total APR = (((1000 + 10)/(1000–5)) — 1 ) × 365 × 100% = 550.25%
Note: The calculation for Annual Percentage Rate (APR) used above is (Daily ROI) * 365 * 100%.
Based on the calculations above, it is evident that joining the Membership Program can significantly enhance your returns. In this example, the APR increased from 366.83% to 550.25%.
If you are interested in more details about Dual Investment and the Membership Program, please feel free to refer to the following links:
- Whitepaper
- Dual Investment Explained in Depth (Things CEXs Never Tell You)
- Ignite Your Earnings With Dyson Finance’s Invite-Only Membership Program
Are you beginning to grasp the substantial impact that joining the Membership Program can have on your earnings?
Step into our Discord now, grab an invitation code, and become a member to unleash the full potential of your profits with Dyson Finance!
About Dyson Finance
Dyson Finance aims to redefine the DeFi landscape by offering a more inclusive, profitable experience for retail investors. By combining the strengths of dynamic AMM, dual investment, and an exclusive Membership Program, Dyson Finance is well-positioned to onboard more users as liquidity providers and advance the DeFi ecosystem.
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