What is the difference between APR and APY in the context of cryptocurrency lending?

3 answers

• Mar 08, 2022 · 3 years ago
  APR stands for Annual Percentage Rate, which represents the annualized interest rate for borrowing or lending cryptocurrency. It is a simple interest rate that does not take into account compounding. On the other hand, APY stands for Annual Percentage Yield, which takes into account the effect of compounding on the overall profitability of lending or borrowing. APY is a more accurate measure of the actual return on investment. In the context of cryptocurrency lending, APR is the base interest rate, while APY reflects the compounded interest over time. It is important to consider both APR and APY when evaluating the profitability of lending or borrowing cryptocurrencies.
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• Mar 08, 2022 · 3 years ago
  Alright, let's break it down. APR is like the basic interest rate you see on a loan or investment, while APY is like the supercharged version that takes into account compounding. So, if you're lending or borrowing cryptocurrencies, APR tells you the simple interest rate you'll be getting or paying, while APY gives you a more accurate picture of the overall return or cost, factoring in the compounding effect. In simple terms, APR is the starting point, and APY is the real deal that shows you the actual growth or cost of your investment or loan.
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• Mar 08, 2022 · 3 years ago
  APR and APY are two important terms to understand when it comes to cryptocurrency lending. APR, or Annual Percentage Rate, is the interest rate you'll be charged or receive on your lending or borrowing activity over a year, without taking into account the compounding effect. APY, or Annual Percentage Yield, on the other hand, factors in the compounding effect and gives you a more accurate measure of the overall profitability. In the context of cryptocurrency lending, APR is the base rate, while APY reflects the actual return or cost you'll experience over time. So, if you want to make informed decisions about lending or borrowing cryptocurrencies, it's crucial to consider both APR and APY.
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