Yields & Returns
APR
Annual Percentage Rate
Annualized simple rate without compounding
Definition
APR is an annualized simple rate on principal, without reinvesting returns. In DeFi it may combine borrower interest, trading fees and token incentives; those components do not have the same durability.
Example
At a constant 10% APR, $1,000 earns $100 over one year, or $25 over three months under a simple quarter-year convention, before fees.
How it works
Simple interest equals principal × rate × time. A dashboard often annualizes a short observation window, so a busy trading day can produce an APR that the next year will never deliver.
Risks to Consider
- Variable rates make the annual projection unreliable
- Token emissions valued at today’s price can overstate income
- Borrowing APR excludes costs such as liquidation penalties
Common Questions
Is APR the same as APY?
No. APR excludes reinvestment; APY depends on how often returns are compounded and assumes the rate persists.
