Annual Percentage Yield
The effective annual return after accounting for compounding, commonly used to compare yield products.
- Also known as
- APY
Annual Percentage Yield (APY) is the annualized return after compounding. It is useful for comparing products that compound at different intervals, while APR states the nominal yearly rate without compounding.
The standard formula is: APY = (1 + r/n)^n - 1, where r is the nominal rate and n is the number of compounding periods per year.
DeFi APYs are often variable and may be extrapolated from short promotional periods. The advertised rate may not include impermanent loss, token price changes, smart-contract risk, lockups, or fees.
Related terms
3 linkedExplore connected entries beyond the alphabetical index.
Annual Percentage Rate (APR)
→The yearly interest rate without accounting for compound interest.
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.
