APY vs APR: what is the difference?

APR (annual percentage rate) takes a periodic rate and multiplies it by the number of periods in a year. APY (annual percentage yield) assumes every payout gets reinvested and starts earning too. The two only match when interest is paid once a year.

The formula is APY = (1 + APR / n) ^ n - 1, where n is the number of compounding periods. Run it and 10 percent APR compounded daily comes to about 10.52 percent APY. At 50 percent APR, the same daily compounding gives about 64.8 percent. The gap widens as the rate climbs, which is how a flashy DeFi APY can sit on a much plainer APR.

DeFi rarely compounds for you. A pool's APY often assumes you claim and restake rewards every day, paying fees each time. Skip that and you earn something close to the APR. The measurement window matters just as much. A 24-hour APR takes one day of fees and stretches it over a year, so one busy day prints a headline that will not last.

One more check before you compare two yields: how much of the number is paid in a reward token that can fall. That is where most headline yields come apart.

Also called: APY, APR, annual percentage yield, annual percentage rate.

Solana yields labels the window on every staking APY: Sanctum LST figures are averages since each token launched, and Marinade's mSOL figure is the trailing 30 days. Raydium pools puts a 24-hour APR next to a 7-day one and splits farm rewards from fee APR, so you can compare like with like.

• Solana yields
• Raydium pools

• Yield farming
• Funding APR
• Liquidity pool
• Lending market
• Liquid staking token