What are APR and APY?

APR is the simple annual rate. APY is what that rate produces once returns are reinvested at the stated frequency.

Why it matters

APY is always the larger and more attractive number, so it is the one marketing uses. Comparing one platform’s APY against another’s APR is not a comparison at all. In crypto both figures carry a further problem: they are usually extrapolations from current conditions, not commitments. A yield derived from variable lending demand or from token emissions can change daily, and a headline figure denominated in a token whose price falls can be a real loss despite a positive percentage.