How does APR versus APY affect the returns on cryptocurrency investments?

TeddyApr 02, 2022 · 3 years ago1 answers

Can you explain the impact of APR versus APY on the returns of cryptocurrency investments? How do these two metrics differ and how do they affect the overall profitability of investing in cryptocurrencies?

Cryptocurrency

APR

APY

1 answers

Apr 02, 2022 · 3 years ago
When it comes to cryptocurrency investments, APR versus APY can make a big difference in terms of returns. APR, or Annual Percentage Rate, is the simple interest rate that does not account for compounding. APY, or Annual Percentage Yield, takes into consideration the compounding effect and provides a more accurate representation of the actual returns. In the cryptocurrency market, where interest-bearing accounts and lending platforms are prevalent, the difference between APR and APY can be substantial. Higher compounding frequency can lead to significantly higher returns over time. Therefore, investors should carefully consider both APR and APY when making investment decisions in the cryptocurrency space.