Annual Percentage Yield

1. definition

Annual Percentage Yield (APY) represents the projected rate of return for a one-year period, considering the effects of compound interest. It's a useful metric for comparing the potential profitability of different investments or financial products.

2. caution

Particularly in the DeFi space, projects may advertise exceptionally high APYs, sometimes in the hundreds or thousands of percent. These figures are often calculated based on short-term, promotional interest rates and extrapolated over a full year.

Be aware that these rates are likely to correct to more realistic figures once the promotional period ends or as more investors add liquidity. Always perform due diligence before investing based on APY.

* All terms and definitions may update as the Cryptionary improves.