How does APY compare to APR in the context of cryptocurrency lending?

3 answers

• Dec 17, 2021 · 3 years ago
  APY and APR are both important metrics used in the context of cryptocurrency lending. APY represents the total interest earned on an investment over a year, taking into account compounding. On the other hand, APR represents the simple interest rate without considering compounding. While APR is useful for comparing different lending options, APY provides a more accurate measure of the actual returns. In cryptocurrency lending, where interest is often compounded frequently, APY is generally considered a more reliable metric to evaluate the potential returns on lending platforms.
  583292
• Dec 17, 2021 · 3 years ago
  When it comes to cryptocurrency lending, APY and APR play a crucial role in understanding the potential returns. APY takes into account the compounding effect, which means that the interest earned is reinvested and generates additional interest. This compounding effect can significantly boost the overall returns on lending platforms. On the other hand, APR only considers the simple interest rate, which may not accurately reflect the actual returns. Therefore, when comparing lending options, it's important to look at the APY rather than just the APR to get a more accurate picture of the potential earnings.
  612204
• Dec 17, 2021 · 3 years ago
  In the context of cryptocurrency lending, APY and APR are two metrics that investors should pay attention to. While APR provides a simple interest rate, APY takes into account the compounding effect, which can result in higher returns. For example, let's say you have two lending platforms offering the same APR of 10%. However, one platform compounds the interest daily, while the other compounds it monthly. In this case, the platform that compounds daily would have a higher APY and potentially offer better returns. So, when evaluating lending platforms, it's important to consider both the APR and the compounding frequency to make an informed decision.
  658165