Annual Percentage Rate (APR)
The yearly interest rate without accounting for compound interest.
- Acronym
- APR
- Also known as
- APR
Annual Percentage Rate (APR) represents the yearly interest charged or earned without considering compounding within the year. It's commonly used in lending and some staking products.
- APR focuses on the nominal rate
- APY includes compounding effects
For a nominal rate r with n compounding periods per year, the relationship is: APY = (1 + r / n)^n - 1 Given APY, the equivalent nominal APR with n periods is: APR = n × ((1 + APY)^(1/n) - 1)
Marketing materials may mix APR and APY. Verify which metric is quoted and the compounding frequency to compare offers fairly.
Related terms
3 linkedExplore connected entries beyond the alphabetical index.
Annual Percentage Yield
→The effective annual return after accounting for compounding, commonly used to compare yield products.
DeFi
→DeFi uses smart contracts to provide permissionless financial services such as trading, lending, borrowing, and asset issuance.
Liquidity
→How easily an asset can be bought or sold in size without causing a large price move.
All terms and definitions may update as the Cryptionary improves.
