Crypto 101: The difference between APR and APY
For the same APR, the more frequently interest is compounded, the higher the APY—but the increase gets smaller and smaller, approaching a limit.
The higher the APR, the more noticeable the effect of compounding: at an APR of 100%, daily compounding gives an APY of about 171.5%.
I didn’t understand this before, and the money I lost learning the hard way could’ve bought me bubble tea for months.
$CAKE is PancakeSwap’s native token. DeFi applications like this often display annualized yields.
For the same APR, the more frequently interest is compounded, the higher the APY—but the increase gets smaller and smaller, approaching a limit.
The higher the APR, the more noticeable the effect of compounding: at an APR of 100%, daily compounding gives an APY of about 171.5%.
I didn’t understand this before, and the money I lost learning the hard way could’ve bought me bubble tea for months.
$CAKE is PancakeSwap’s native token. DeFi applications like this often display annualized yields.
