The annual percentage yield (APY) is the real rate of return earned on a savings deposit or investment taking into account the effect of compounding interest. Unlike simple interest, compounding interest is calculated periodically and the amount is immediately added to the balance. With each period going forward, the account balance gets a little bigger, so the interest paid on the balance gets bigger as well.
You might be interested to also see the following guides:
- Introducing De.Fi
- What is DeFi?
- What are pools?
- What to consider before farming yield?
- What is yield farming?
- What is Total Value Locked (TVL)?
- What Is the Annual Percentage Yield (APY)?
- What is liquidity mining?
- What is composability?
- What is a stablecoin?
- What is a liquidity provider?
- What are the potential use cases for DeFi?
- How to avoid getting Rekt with Yield Farming
- Why Are You Miscalculating Your Impermanent Loss And How To Stop Doing It
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