1. | basic
The rate of return expected over the course of a year, taking into account compound interest.
2. | caution
Often projects - especially new DeFi ones - advertise extremely high APY rates which are unrealistic. Sometimes in the hundreds of %, sometimes in the thousands of %.
This is often done by calculating the APY based on a very short time-frame, with special early interest rate boosts, and then extrapolating that rate over the full year.
As soon as the special event ends, or more investors add liquidity, the APY usually corrects to more realistic numbers.
* All terms and definitions will change as the Cryptionary improves