What is the difference between APR and APY in the cryptocurrency industry?

1 answers

• Dec 16, 2021 · 3 years ago
  In the cryptocurrency industry, APR and APY are two terms that investors should be familiar with. APR, or Annual Percentage Rate, refers to the annualized interest rate that lenders charge borrowers for borrowing digital assets. It represents the cost of borrowing and does not take into account the compounding effect. On the other hand, APY, or Annual Percentage Yield, considers the compounding effect and represents the actual annualized return on an investment. APY includes the interest earned on the initial investment as well as the interest earned on the accumulated interest. Therefore, APY is generally higher than APR, especially for investments with compounding interest. It is important for investors to carefully consider both APR and APY when evaluating investment opportunities in the cryptocurrency industry.
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