How to calculate APY in crypto?

To calculate APY in crypto, you need to know the interest rate and the compounding frequency. APY = ( (1 + Interest Rate / Number of times compounded per year) ^ (Number of times compounded per year)) – 1 For example, let’s say you deposit 1 ETH into a staking program that offers an interest rate of ‘10%’ annually and compounds interest ‘daily.’

What is APY & how does it work?

APY is much like APR, except it takes the effects of compounding into account. Put simply, compounding is what happens when you earn interest on the previous interest. If John’s bank pays the interest per month, the total interest payment over the year will be different.

What is annualized percentage yield (APY)?

In simple terms, Annualized Percentage Yield (APY) is a metric that describes the annual interest rate earned on an investment. From a crypto perspective, APY describes the rate of return on a crypto investment, such as a staking or lending program.

Why is crypto APY so high?

Crypto APY is often higher than traditional investments due to high-interest rates, compounding frequency, high demand, lack of regulation, and high volatility. However, proper research on the platform, company, or project is essential before making any investment decision.