Annual percentage rate

Annual percentage rate, or APR, is a yearly rate of return that does not include compounding. In crypto, APR is often used to describe borrowing costs, lending returns, staking rewards, or other yield-style figures. If rewards are not automatically added back into a user’s balance, APR can help show the base annual rate before compounding effects. APR is often erroneously interchanged with annual percentage yield (APY) which includes the impact of compounding. APR is a rate format, not a guarantee and users need to understand what generates the rate and whether it can change.

A crypto lending product may advertise a 6% APR, meaning the base yearly rate is 6% before any compounding. If the reward is paid out but not automatically reinvested, APR represents the simple annual rate rather than the compounded return.