How is Sceptre for Flare’s APY calculated?

Sceptre currently boasts an attractive 44.99% APY for Flare deposits. While great, our long-term community will recall that this number has gone up and down since we launched last year. This begs the question: what's the methodology behind Sceptre's APY calculation?

The Annual Percentage Yield (APY) generally represents the total return earned on an interest-bearing account over a year, factoring in compounding - earning interest on previously earned interest, or in Sceptre's case, rewards on top of rewards. On Sceptre, the APY is an estimate of the annualized liquid staking rewards based on the current liquid staking delegations. This figure is dependent on the staking ratio of the Flare network and the performance of the underlying validators, which fluctuate over time and is reflected on the number you see on our app.

What’s added to the Sceptre pool, increasing the exchange rate and affecting the APY?

To support Sceptre's APY, we stake all the FLR the community staked with us, plus:

1. FlareDrops (after our 10% service fee)

2. Staking Rewards (after our 10% service fee)

3. Buy-in fees collected during the initial staking period (on which we don't charge a service fee)

Every time FlareDrops and staking rewards are claimed, the sFLR:FLR exchange rate goes up. As we’ll see, the APY is also revised because it’s based on the difference between the last 2 FlareDrops in the exchange rate. The 10% service fee all users pay for using Sceptre is directly discounted from the FlareDrop and staking rewards, which means it doesn’t need to be deducted from the APY or exchange rate anymore.

How is Sceptre for Flare’s APY calculated?

Sceptre for Flare's APY calculation is transparent and can be viewed publicly in the General stats area of the app by checking the “Estimated annual percentage yield” info button.

The algorithm is visible on the Sceptre for Flare app

To calculate the APY, we:

1- Get the exchange rates (r1, r2) corresponding to the start and end period of a FlareDrop calculation.

2- Calculate time difference between those dates (Δt) in seconds

3- Get the number of seconds in a year (31.536.000 for 365 days)

4- Apply the formula: APY = (r2 - r1) * (seconds_per_year / Δt)

When applied to the current APY calculation, we get:

1- Start exchange rate: 1.322685309480886359, as of March 6th, 2025

2- End exchange rate: 1.359660554661699881, as of April 5th, 2025

3- Time difference: 2.591.538 seconds

4- APY = (1.3597 - 1.3227) * (31.536.000/2591538) = 44.99%

We hope this article cleared any doubts you may have about Sceptre for Flare’s APY. If you still have any questions, please feel free to reach out to our team on X, Telegram or Discord and we’ll happily answer them.