What Is Annual Percentage Yield (APY)?

The annual percentage yield (APY) is the real rate of return earned, taking into account the effect of compounding interest. Compounding interest is calculated over measured periods and the amount is added to the balance within the measured period (typically one year). With each following period, the account balance grows so the interest paid scales accordingly. This compounding effect leads to exponential growth over time as long as the unit of value holds constant.

Calculating APY

APY standardizes the rate of yield. It does this by taking the real percentage of growth that will be earned in compound growth assuming that the value is deposited for one year. The formula for calculating APY is:

Where:

  • r = period rate
  • n = number of compounding periods

Source: Investopedia.com

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5+
Blockchains
12% APY*
Across DeFi*
50+
Tokens Supported