What is APY in crypto?

APY vs APR

APR (annual percentage rate) is the simple yearly rate without compounding. APY includes compounding, so for the same underlying rate, APY is always equal to or higher than APR. The more often rewards are compounded, the bigger the gap.

For example, 10% APR compounded daily works out to about 10.52% APY, while 10% APR paid once a year is exactly 10% APY. When you compare two offers, check that both use the same measure.

How crypto APY is worked out

In staking, APY depends on the network’s reward rate, how much of the supply is staked, validator performance and the pool’s fee. In lending and liquidity pools, it depends on borrowing demand and trading fees, which change constantly. Most crypto APYs are therefore variable, and the figure you see is an estimate based on recent results, not a promise.

• The yield is paid in the token you deposit, not in your local currency
• Platform or pool fees may or may not be included in the quoted figure
• Rewards often compound only if you restake them yourself

Why a very high APY is a red flag

A yield far above what major proof-of-stake networks pay usually means one of three things: rewards are paid in a token that is being created quickly, the platform is taking hidden risks with deposits, or it is a scheme paying earlier users with new deposits. Several lending platforms advertised high fixed yields shortly before freezing withdrawals.

• Ask where the yield actually comes from
• Check for lock-ups or notice periods on withdrawals
• Remember that 20% APY on a token that halves in price is still a loss in your currency

APY and staking in Waletifi

Where available in your country, you can stake TON from the Waletifi app. Like all staking rewards, TON rewards are variable and paid in TON, so their value in your currency moves with the price.