APY (Annual Percentage Yield)
DeFi
Yearly return that includes compounding.
APY measures the effect of compounding on your yearly return. If rewards are reinvested, your balance grows faster than with a simple rate. Always check how often compounding happens and what fees apply, then compare the net results to alternatives.
Frequently asked questions
Why is APY higher than APR?
Because it includes the effect of earning on your earnings. The more often you compound, the higher the APY for the same base rate.How often is compounding in DeFi?
It depends on the product. Some auto compound per block, others daily or when users claim. Read the docs and check update times.How can I estimate real returns?
Track deposits, rewards, fees, and price changes over time. Use simple spreadsheets and compare net results, not just headline APY.