APY vs APR

APR (annual percentage rate) and APY (annual percentage yield) both describe a yearly return, but APY includes the effect of compounding and APR does not.

If a staking product pays 10% APR, you earn 10% of your original deposit over a year. If those rewards are added to your balance and themselves earn rewards, the effective yield is higher. With daily compounding, 10% APR works out to about 10.5% APY. The more frequently returns compound, the bigger the gap, which is why platforms often prefer to advertise APY.

In crypto, both figures are usually estimates based on recent conditions, not guarantees. DeFi rates change by the hour, rewards paid in a volatile token can lose value faster than they accumulate, and very high advertised yields often rely on newly printed tokens or carry hidden risks. Always check what currency the yield is paid in, whether it is fixed or variable, and whether there are lock-up periods.