Referral farming rewards are distributed to those who successfully recommend/promote a token (Refer to Earn) and those who buy the token via the referral link (Buy to Earn). The rewards are paid out daily to all the users who join the farm via daily farming rewards based on their share in the total farm “position” for that day.
A “position” in the referral farm is created for an individual who recommended/promoted a token and the one who bought the token via the referral link (position = amount of tokens purchased). Both parties receive the same “position” in the farm, in the amount of the tokens bought, to account equally for their “added value” to the token community (effectively, a double “position” is created).
- referrer position = amount of tokens purchased via referrer's referral link
- buyer position = amount of tokens purchased via referral link
- total position = all referrers' positions + all buyers' positions
The higher your share of the total position, the bigger your slice of the daily rewards. Your “position” can increase when you buy more tokens, or decrease when you sell your tokens (Buy-and-Hold mechanism). You will keep earning daily rewards as long as there is a positive “position” (i.e., position > 0), or until the referral farm runs out of rewards (i.e., total referral rewards = 0).
My daily rewards:
(my position / total position) x daily rewards
Estimated Referral Rate and APR (Annual Percentage Rate) is an indicator of current rewards one can earn for the value of tokens purchased. Keep in mind that this is an estimated rate which can increase or decrease depending on the total amount of tokens purchased and held via referrals (total farm “position”). Note that Referral Rate and APR are will always be the same as both referrers and buyers earn the same exact rate (only the naming is different).
Estimated Referral Rate and Estimated APR formula
(daily rewards / total farm “position”) x 365 x 100
- Referral farm with $ABC referred token rewards 100 $ABC daily for successful referrals (total rewards deposited = 5.000 $ABC)
- Alice believes in $ABC, decides to Refer to Earn and creates her referral link and shares with her community
- A few members of her community buy 10K $ABC in total
- Alice and her community join the referral farm with position of 10K $ABC (10k $ABC Alice + 10k $ABC her community => total position in the farm = 20K $ABC)
- Alice owns ½ of the total farm “position” and receives 50 $ABC each day, while 50 $ABC is distributed among Alice’s community that bought $ABC via her referral link (each community member earns per their own “position’)
- Alice and her community stop earning rewards when their position is sold or when the total rewards budget becomes empty (would empty in 50 days since the total rewards deposited were 5.000 $ABC)
Referral Rate and APR calculation
Applying the daily rewards formula as explained above:
Referral Rate and APR
= 100 $ABC daily rewards / (5.000 $ABC Alice + 5.000 $ATTR Alice community) x 365 x 100
= 100 $ABC / 10.000 $ABC x 365 x 100