APR (Annual Percentage Rate)
is the simple annual interest rate that does not take into account compound interest.
APY (Annual Percentage Yield)
The actual annualized rate of return after compounding is taken into account.
In the DeFi project, if the projecter refers to an “automatic re-entry”, it usually shows that APY； If you receive the award manually, the APR is displayed.
ASY vs APR: Uncovered Digital Game in Encrypted Currency Management
When entering the DeFi or CeFi fields of finance, you often see two abbreviations: APR and APY。 They look like, but for your wallet, the difference could be huge. Understanding these two concepts and the logic of transformation behind them is a compulsory course for every mature encrypted money investor.
Specific investment pains for core differences
- Identification of “high” gains: A lot of targets, 100% or more. ASY, LOOKS ENOUGH. But if you switch through this calculator, if it's a daily compound, the APR might be just... Twenty-four percent or so. Understanding this would help you to assess risk more rationally.
- Effects of compound frequency: What difference does it make between daily and monthly interest? You'll see by simulation, as the frequency of compound interest increases, ASY It'll be up. This tool supports multiple frequencies and helps you to find the most appropriate pick-up/revolved rhythm.
- Manual vs Autorender Decision: If a project offers 20% of the APR, but not automatically, you need to calculate the manual resold Gas Whether costs are covered by the additional benefits of compound interest.
How can financial planning be done using converters?
Scenario one: Compare property items from different platforms. Platform A provides 12% of the APR (monthly settlement) and Platform B provides 12.5% ASY (reconciled daily). Which one is more profitable? After a one-key conversion, you'll find that Platform A's A.A. A.A.'s about 12,68%, actually better than the platform. B。
Scenario 2: Calculates the real proceeds of the pledge. Many of the pledged proceeds of the public chain are issued under the APR. If you're going to hold it for a long time and repeat it, use ASY The model will predict more accurately the size of your assets in a year.
Scenario III: Assessing the benefits of mobile mining. Incentives for mining are usually granted in the form of governance tokens (APR). You can estimate by calculator that if you sell the reward every day and replace it with LP. Reinvesting, the theoretical maximum annualization of the benefits is what.
The logic behind math.
APR Turn ASY Formula:
APY = (1 + APR/n)^n - 1
ASY Turn APR formula:
APR = n * ((1 + APY)^(1/n) - 1)
of which
n
Represents the number of compound interest per year. When?
n
The tendency to grow infinity is a continuous compound, which is the theoretical limit of the rate of return growth.
Expert recommendations
Don't just get high, ASY. Attract. In highly volatile markets, the decline in the price of the coin itself tends to easily offset the gain on the compound. Reference to APY Meanwhile, we're combining the station. Impermanent Loss Calculators and Leveraged Calculators , perform a full risk assessment.