What is APY in crypto?

APY is typically used for things that earn people money. In crypto, this entails staking, yield farming, and also crypto savings accounts. Effective annual interest rate (EAR) is an alternative term for APY. In TradFi, platforms apply APY to savings, deposits, money market funds, and other interest-paying accounts.

What is an APY value?

Each crypto has what we can refer to as an “APY value”. Some cryptos have significantly higher APYs than others, which is often reflected across the platforms offering APY-based interest. APY rates always include the effects of compound interest. This is because compound interest can easily mean more profit for the recipient.

What does a 100% APY mean?

A 100% APY doesn't mean much if you're earning that on a crypto that suffers a 90% price drop. If the liquidity pool you choose does well, expect to see the interest rate go down. Pools without much value need to offer high interest rates to attract lenders. As more crypto gets added, interest rates decrease accordingly.

What does a high APY mean?

A high APY means that users gain more with their deposit. Hence, users looking to deposit their crypto should consider the APY when they compare platforms. However, users should take note that the APY fluctuates. Most crypto savings options and liquidity pools offer APYs of over 1%.