APR vs. APY: Understanding Your Staking Yields

When entering the world of crypto staking and decentralized finance (DeFi), understanding the difference between APR (Annual Percentage Rate) and APY (Annual Percentage Yield) is vital for accurately projecting your staking rewards and overall Return on Investment (ROI).

APR represents the simple interest earned over a year. If you stake 100 tokens at 10% APR for 3 years, you earn 10 tokens each year, regardless of how often you receive the payout. The reward is calculated only on the initial principal.

APY is the rate that matters most for long-term growth because it includes the effect of compounding. Compounding means that the rewards you earn are automatically added back to your staked principal, and your *next* set of rewards is calculated on the new, larger amount. The higher the compounding frequency (daily is better than monthly), the higher your effective APY will be compared to the base APR.

Using the Staking Calculator

• If your platform states ‘APR’: Input the rate and choose your compounding frequency (e.g., daily). The calculator will show you the higher equivalent APY.
• If your platform states ‘APY’: Input the rate and choose ‘Annually’ for compounding, as the rate already reflects the total compounded yield.
• Projection: Use the chart to compare the modest gain from simple interest against the explosive growth potential of compound interest over several years.

Related Tools

For other crypto financial planning, consider using these utilities:

• Crypto Mining Profit Calculator – Estimate hardware ROI.
• Live Crypto PnL Calculator – Track trading profits and losses.
• Crypto Wallet Address Validator – Verify addresses before sending.