What is APR vs APY?

APR (annual percentage rate) and APY (annual percentage yield) both describe yearly returns, but they measure differently. APR is the plain rate without compounding. APY assumes your rewards are reinvested and earn their own rewards, so for the same base rate, APY is always equal to or higher than APR.

This matters when comparing earn products. A platform might advertise a big APY that only holds if rewards compound automatically and the token price stays flat. Comparing one product’s APR to another’s APY is not apples to apples.

Example: a 10% APR that compounds daily works out to roughly 10.5% APY; the underlying reward is the same, but the compounded figure looks larger.

Safety note: sky-high APY numbers are a favourite marketing trick. Extremely high yields usually come from inflationary token emissions, hidden risk, or outright fraud. Ask where the yield actually comes from, and remember that a quoted APY says nothing about whether the token itself will hold its value. Related terms include rewards rate, staking, and yield farming.