APY vs APR in Crypto: What's the Difference?
APY includes compounding, APR does not. The APY vs APR formula, a worked table at 10% APR, and how to compare crypto yields and loan rates fairly.
APY vs APR is the difference between a yearly return that includes compounding (APY, annual percentage yield) and one that does not (APR, annual percentage rate). For the same underlying rate, APY is always equal to or higher than APR, so knowing which one a crypto platform is quoting tells you how to compare offers.
APY vs APR definition
APR stands for annual percentage rate. It is the simple yearly rate: if you earn 10% APR on 1,000 USDC and never reinvest, you end the year with 100 USDC of interest.
APY stands for annual percentage yield. It assumes the interest you earn is added back to the principal at regular intervals, so later interest is earned on earlier interest. That compounding is the only difference between the two.
In crypto, lending rates and borrowing costs are often shown as APR, while staking, vaults and auto-compounding farms usually show APY. Neither label is wrong, but putting a 10% APR next to a 10.5% APY makes the second look better when they may be the same rate.
How APY vs APR works
The conversion uses one formula, where n is the number of compounding periods per year:
APY = (1 + APR ÷ n) ^ n − 1
- Divide the APR by the number of periods to get the rate per period.
- Add 1 and raise it to the power of the number of periods.
- Subtract 1. The result is the effective yearly yield.
The more often you compound, the bigger the gap, but the gains shrink quickly after daily compounding. The gap also grows with the size of the rate: at low rates APY and APR are nearly identical, at high rates they diverge sharply.
APY vs APR example
Say you deposit a hypothetical 1,000 USDC at 10% APR. Here is what the same rate becomes at different compounding frequencies:
| Compounding | Periods per year | APY | Balance after 1 year |
|---|---|---|---|
| None (simple APR) | 1 | 10.00% | 1,100.00 USDC |
| Monthly | 12 | 10.47% | 1,104.71 USDC |
| Weekly | 52 | 10.51% | 1,105.06 USDC |
| Daily | 365 | 10.52% | 1,105.16 USDC |
The difference is about 5 USDC on 1,000 at 10%. At 30% APR, daily compounding would turn into roughly 34.97% APY, a much bigger gap. That is why very high APY numbers deserve a second look: they often assume a high rate compounded perfectly for a full year, which rarely happens in practice. Our guide to stablecoin yield farming shows how this plays out with real strategies.
Why APY vs APR matters
- Compare like with like. Convert both offers to the same basis before choosing. A 10% APR loan cost is not the same as a 10% APY deposit yield.
- Quoted APY is a projection. It assumes today's rate holds all year and every reward is reinvested. Variable DeFi rates, falling token prices and gas costs all pull the real figure down.
- Reward-token APY can be misleading. If part of the yield is paid in a token whose price falls, the APY in dollar terms can be far lower than the headline number.
- Compounding costs gas. Reinvesting manually every day on a small position can cost more in fees than it earns. Auto-compounding vaults spread that cost across all depositors.
- Know where yield comes from. Trading fees, borrower interest and staking rewards are more durable than token emissions; see how DeFi protocols make money.
APY vs APR on JewelSwap
JewelSwap's yield farms on MultiversX and Sui auto-compound rewards back into the position, so their returns are naturally expressed as APY, while borrowing costs on leveraged positions are interest rates closer to APR. When comparing a farm against holding or staking directly, check which basis each number uses and which token the rewards are paid in.
Related terms
- Auto-compounding — reinvesting rewards automatically, the reason APY exceeds APR.
- Real yield — returns paid from actual revenue rather than new token emissions.
- Liquidity mining — reward programs that often drive headline APYs.
- Epoch — the period that sets how often staking rewards compound.
- Utilization rate — the share of a lending pool that is borrowed, which drives lending APR.
Learn more on the JewelSwap blog
- What is yield farming? A beginner's guide — where farm yields come from and how they are quoted.
- Stablecoin yield farming — earning on stablecoins and judging whether a quoted APY is sustainable.
- Sui staking rewards and APY explained — how per-epoch staking rewards turn into an annual figure.
- How DeFi protocols make money — the revenue behind yields, and which yields are durable.
Frequently asked questions
What is APY in crypto?
APY (annual percentage yield) is the yearly return on a crypto deposit assuming rewards are reinvested and compounded. It is common for staking, vaults and auto-compounding farms.
What is APR in crypto?
APR (annual percentage rate) is the simple yearly rate without compounding. It is common for lending and borrowing rates and for farm rewards that are paid out rather than reinvested.
Is APY or APR better?
Neither is better; they describe the same rate in different ways. For deposits, a higher APY at the same APR means more frequent compounding. For loans, always compare APR to APR, because an APY figure will make borrowing costs look higher than a competitor quoting APR.
JewelSwap Crypto Glossary · educational, not financial advice. Updated 2 October 2026. Browse the full glossary.
