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Annual percentage yield
Decentralized Finance (Defi)
Moderate
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Annual percentage yield, or APY, is a yearly rate of return that includes the impact of compounding. In crypto, APY may appear in staking, lending, liquidity pools, or rewards products when earnings can be added back to the product and generate more rewards over time. APY is often confused with Annual Percentage Return (APR) because it includes the impact of compounding. In the majority of cases, APY is higher than APR due to the impact of compounding. A crypto APY can change if network rewards, token prices, or platform rules change.
A staking product may show 6.2% APY when rewards are automatically added back into the product. The APY reflects the effect of compounding, so it may be higher than the same product’s APR.