APR expresses a rate as a straightforward yearly figure without accounting for compounding, the process of earning returns on your returns. If a platform advertises a ten-percent APR on a staked coin, it means that over a year you would earn ten percent of your stake in rewards, assuming the rate holds and you do not reinvest along the way. It is the plain, headline number.
APR is useful for quick comparisons, but in crypto it comes with important caveats. Advertised rates are often variable and can change with market conditions, so a rate quoted today is not a promise for the year. Many crypto yields are also paid in the same volatile token you staked, meaning your reward's cash value can rise or fall sharply regardless of the percentage. A high APR frequently signals high risk, not free money.
The key contrast is with APY, which does include compounding and so is usually a bit higher for the same underlying rate. When comparing offers, check which one you are looking at, and treat any advertised return as an estimate. Crypto House explains these terms as mechanics; nothing here is financial advice. Reading the rate as an estimate, and checking how often it has changed, guards against treating a headline figure as a promise.
Key takeaways
- APR is a simple annual interest rate that does not account for compounding.
- In crypto, APRs are often variable and paid in a volatile token, so the headline rate is not a promise.
- APY, by contrast, includes compounding, so check which figure an offer actually quotes.
APR — часто задаваемые вопросы
What is the difference between APR and APY?
APR is the simple annual rate with no compounding, while APY includes the effect of compounding your returns. For the same underlying rate, APY is usually a little higher, so it is important to know which one is being advertised.
Is a high APR always good?
Not necessarily. In crypto a very high APR often reflects high risk, such as a volatile reward token or a risky protocol, and advertised rates can change. A large headline number is not the same as a reliable return.
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