APR (Annual Percentage Rate)
DeFi
Yearly rate that does not include compounding.
APR shows the yearly rate of return without compounding. If earnings are paid out and you do not reinvest them, APR is a useful baseline. When rewards are auto compounded, APY gives a better picture of your effective return. In DeFi, rates change as liquidity moves and incentives update, so treat APR as a live estimate.
Frequently asked questions
Why can APR and APY be different?
APY includes compounding. If earnings are reinvested during the year, APY will be higher than APR at the same base rate.Which metric should I use?
For simple comparisons use APR. If you plan to reinvest rewards, check APY, because it shows the effective return.What affects APR in DeFi?
Protocol fees, token emissions, and market demand. Rewards can change over time, so track them rather than assuming a fixed rate.