APY (Annual Percentage Yield)
Yearly return including compounding — the standard way crypto platforms advertise staking and lending rewards.
APY (Annual Percentage Yield) expresses a return over one year including the effect of compounding — earning yield on previously earned yield. It differs from APR, which excludes compounding: 10% APR compounded daily equals about 10.52% APY.
In crypto, APY is quoted for staking, lending and yield farming. Two cautions: quoted APYs are usually snapshots that change hourly, and rewards paid in a volatile token can be worthless even at high APY if the token’s price falls faster. Always ask where the yield comes from — sustainable sources are fees and issuance, not new deposits.