Crypto APY & APR Calculator: Understand Your Real Yield
Don't get confused by APY vs. APR! Use our calculator to see the actual Annual Percentage Yield (APY) you can expect from a given Annual Percentage Rate (APR) by factoring in compounding.
How to Use Our APY/APR Calculator
Unlock the power of compounding with these simple steps:
- Enter APR: Input the advertised Annual Percentage Rate (APR) for your crypto staking, lending, or farming opportunity.
- Select Compounding Frequency: Choose how often your earnings are compounded (e.g., daily, weekly, monthly). This is crucial!
- Calculate APY: Click the button to see your true Annual Percentage Yield (APY).
APR vs. APY: What's the Critical Difference?
APR (Annual Percentage Rate)
APR is the simple annual interest rate you earn on your principal. It does not take compounding into account.
Simple Interest = Principal * Rate * Time
APY (Annual Percentage Yield)
APY is the actual annual rate of return you earn once compounding is factored in. Because you earn interest on your previously earned interest, APY is almost always higher than APR (unless compounding is only annual).
APY reflects the true power of compounding.
Why Understanding APY is Vital for Crypto Investors
- Maximize Your Earnings: APY shows the real growth potential of your crypto assets, especially with frequent compounding common in DeFi.
- Compare Opportunities Accurately: Always compare APYs, not just APRs, when evaluating different staking or yield farming options.
- Visualize Compounding Growth: See firsthand how reinvesting your earnings can significantly boost your returns over time. Check out our Compounding Calculator for more detail.
The APY Formula
The Annual Percentage Yield (APY) is calculated from APR using the formula:
APY = (1 + (APR / n))^n - 1Where:
- APR: The Annual Percentage Rate (as a decimal, e.g., 10% = 0.10)
- n: The number of times the interest is compounded per year.
Example Calculation
Suppose you have an APR of 10% (0.10) and it's compounded monthly (n=12):
APY = (1 + (0.10 / 12))^12 - 1
APY = (1 + 0.008333)^12 - 1
APY = (1.008333)^12 - 1
APY = 1.104713 - 1
APY = 0.104713 or 10.47%
Important Disclaimer
This APY/APR calculator is for informational and educational purposes only. It should not be considered financial advice. DeFi investments carry significant risks, including smart contract vulnerabilities and impermanent loss. Always do your own research (DYOR).