The yield farming calculator on Francium can be used as a position equity simulator based on different position settings. With the yield farming calculator, you can set up one position and see how much you will earn, how changes in price impact your equity values, and the risk of liquidation. You may also model changes in value for different amounts of leverage and different borrowed assets.
The green words in the middle of the page represent your estimated profit in X days. Hovering over it reveals the specific introduction: "The estimated profit (% of current equity) when the SOL/USDC price remains unchanged after investing X day(s) by leveraged farming." You can manually adjust the investment duration to observe the change.
Let’s look at the example below: arm in the ORCA-USDC pool, borrow USDC, and leverage up to 3x. The horizontal axis refers to the ORCA price change. The vertical axis represents percentages of Equity, and there are two lines: Liquidation Price (Yellow Line) and Equity Value (Green Line). The Equity Value starts at 100% right when you invest.
When you hover over the yield farming calculator, a white box will appear with three values in it: ORCA/USDC Price Change, ORCA Price, and Equity Value (Leveraged Farming).
You will see the Equity Value at 100% when you hover your pointer over the current ORCA price ($13.76). What happens if the price of ORCA declines? Let’s look at the illustration. Assume the price of ORCA declines to $8.8, i.e., the price has fallen 36%, and reaches its liquidation price indicated by the yellow line. Liquidation is triggered, and your Equity Value becomes 40%.
Alternatively, if the price increases, your Equity Value will increase as well. The current condition explains the logic of a long position: If you borrow USDC and set 3x leverage, your Equity Value will decrease when the ORCA price drops (or increase when the price rises).
The above case does not take into account a stop-loss or the specific asset you deposit. In addition, trading fees and farming yields are auto-compounded, which may help secure the Kill Position level.
In the second case, if you borrow ORCA, you will be in danger of liquidation when the ORCA price rises. What happens if the price of ORCA increases to $20.2? The price has increased by 56%, and you are at the Liquidation Price. Your Equity Value drops to 62.69%. If ORCA trades within a specific price range, you make a profit. This shows the logic of a short position. However, if the price of ORCA goes to zero, the pool's value will decline to zero as well.
If you turn on the "Advanced Mode", more operations can be done. You are able to adjust ORCA initial price, Farming APR, Borrowing Interest APR and Liquidation Threshold to see the liquidation price and how your estimated profit changes.
At the bottom of the calculator, you can see four lines and what each of them represents. The solid green line and the dotted green line represent your estimated profits from Leveraged Farming and Farming Without Leverage respectively. The blue line represents the situation where your asset (USDC) is sitting in your wallet. If you input the amount of any token (not USDC), you may see its linear change.
Please note that there is another button in the bottom right corner of the calculator. When you turn this button on, you are able to adjust the range of the X-axis.