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What is Apr & APY in crypto?

Regardless, when participants enter the crypto world, they are often bombarded with new terms and jargon. Whether one is yield farming, or lending or borrowing digital assets, the terms annual percentage rate (APR) and annual percentage yield (APY) usually pops up.

What is APY in crypto?

APY, short for annual percentage yield, measures the rate of return when users deposit their funds into different lending and yield farming protocols. APY includes the effects of compound interest, which can transform low daily or hourly returns into massive amounts over time.

What is the difference between APR and APY?

APR and APY are two forms of interest rates. Both are measurements for yields generated by protocols, centralized digital asset lending platforms, and other crypto investment platforms. Some platforms may use APR, while others work out yields using APY. While they may sound similar, the two interest rates do not generate the same results.

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