Venus Net APY vs APY, Explained

Hi Venus Community,

Can someone explain how the APY is calculated?

For example, I have borrowed 10,000 BUSD and the Net APY fluctuates between 0% and -5%, while the APY (without XVS) is between -8% and -15%. How is the difference between the two calculated? Specifically:

  1. Do I get XVS tokens from borrowing?
  2. Or are the XVS tokens taken out of the APY I pay in BUSD? In other words, are XVS used continuously to repay interest on my borrowed BUSD to maintain a low and sweet Net APY?

The interest on my borrowed BUSD accumulates very slowly, so I think (2) is correct, repaying interest with XVS…