Survivable APR

The most important metric in FYOS: what you can actually capture after all market frictions.

Definition

Survivable APR represents the realistic annual percentage return you can expect to capture after accounting for:

• Rate decay over time
• Crowding from other traders
• Execution costs

Unlike raw APR which shows the headline rate, survivable APR tells you what you can actually achieve.

Formula

Where:

• $APR_{raw}$ = Headline annualized funding rate
• $D(h)$ = Decay factor over holding horizon $h$
• $C_{impact}$ = Crowding impact (0-1)
• $E_{cost}$ = Execution cost as APR equivalent

Interpretation

Example

A headline funding rate of 150% APR might seem attractive, but after adjustments:

• Raw APR: 150%
• After decay (50%): 75%
• After crowding (30%): 52.5%
• After execution: ~45% survivable

The mirage ratio in this case is 70% — most of the headline yield is illusory.

Key Considerations

1. Always compare survivable APR, never raw APR
2. Consider your position size — larger positions face more capacity friction
3. Check half-life — short half-life means faster decay
4. Monitor crowding — high crowding reduces survivable APR further

Related Metrics

• Raw APR — The headline rate before adjustments
• Half-life — Rate persistence measure
• Mirage Ratio — Fraction of yield that won't survive
• Crowding Risk — Competition from other traders