APY vs. APR in Crypto: The Difference Compounds

The short answer: APR is the simple annual rate and APY is the result after compounding — so for the same quoted number, an APR product finishes higher once rewards are reinvested, which is why platforms advertise APY on what they pay you and APR on what you owe them.

Two platforms advertise staking on the same coin: one says 8% APR, the other 8% APY. Same number, same coin — the APR platform pays more. If that sentence feels backwards, this guide is for you, because crypto yield marketing runs almost entirely on that confusion.

The definitions, minus the fog

APR (annual percentage rate) is the simple rate: 12% APR pays 1% per month on your original amount, period. APY (annual percentage yield) is the result including compounding: if that 1% per month is reinvested, each month’s interest earns its own interest, and the year ends at 12.68%, not 12%.

So an “8% APY” already includes the compounding bonus — it’s the finish line. An “8% APR, compounded” finishes above 8%. That’s the whole trick: APR quotes the engine, APY quotes the destination, and for equal quoted numbers the APR product lands higher once compounding is turned on.

The conversion table

What a given APR becomes as APY, by compounding frequency:

APR	Monthly	Daily
5%	5.12%	5.13%
10%	10.47%	10.52%
20%	21.94%	22.13%
50%	63.21%	64.82%

Two honest readings of this table. First: at normal rates the difference is real but modest — half a point at 10%. Second: at DeFi-farm rates the gap explodes — a “150% APY” banner can describe a pool whose underlying emission rate is closer to 92% APR. The bigger the number, the more of it is arithmetic rather than yield.

And note how tightly the monthly and daily columns hug each other: compounding frequency stops mattering almost immediately. Continuous compounding of 10% APR yields 10.5171% — three thousandths of a point above daily. Any platform leading with its compounding frequency instead of its rate is decorating.

Where each number hides in crypto

• Proof-of-stake dashboards usually quote APR — the protocol’s emission rate. Whether you get the APY on top depends on the chain: Solana and Cardano restake rewards automatically; Ethereum solo-staking rewards sit unstaked until you act (liquid staking tokens re-add the compounding). Same APR, different realized APY — the staking calculator tracks the compounding mode per coin for exactly this reason.
• Lending and “earn” products quote APY on deposits (bigger number = more deposits) and APR on borrows (smaller number = cheaper-looking debt). The same desk uses both conventions in one interface, each pointed the flattering direction.
• DeFi farm aggregators quote APY compounded at some assumed frequency from a reward stream that is itself an APR in a volatile token. Between the token’s price risk and the reinvestment assumption, treat triple-digit APYs as screenshots, not forecasts.

The three-question filter

1. “Is this APR or APY?” If the page doesn’t say, assume it’s whichever makes the product look better.
2. “Who does the compounding?” Auto-compounding makes the APY real; manual claiming makes it conditional on you showing up (and paying the claim fees — on some chains, frequent small claims cost more gas than they earn).
3. “Compounded in what?” An APY paid in a token that halved is a loss with excellent arithmetic. Rate risk and asset risk are separate lines; our stablecoin yields guide covers the version of this that applies even to “stable” products.

See it, don’t take it on faith

The cleanest way to internalize the gap is to run one number both ways: put 10% into the compound interest calculator with monthly compounding and without, same deposit, five years. The curves start together and end meaningfully apart — and adding a modest monthly contribution widens the gap much faster than any compounding-frequency trick ever will. That, quietly, is the actually useful lesson hiding under the APY/APR shell game: the deposits compound too.