APY (Annual Percentage Yield)
The annualized rate of return on an investment, including compound interest.
Explained Simply
APY represents how much you'd earn over a year if rewards are reinvested (compounded). It's different from APR, which doesn't account for compounding. In crypto, APY is commonly used for staking rewards, lending yields, and liquidity pool returns. Be cautious of extremely high APYs — sustainable yields for major assets are typically 3-12%. Anything significantly higher often comes with proportionally higher risk.
Example
5% APY on $10,000 of staked SOL would earn approximately $500 over one year, with rewards compounding.
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