APY/APR Converter
Convert between Annual Percentage Yield (APY) and Annual Percentage Rate (APR). Essential for understanding DeFi yields and staking rewards.
APY/APR Converter
Convert between Annual Percentage Yield (APY) and Annual Percentage Rate (APR)
APR vs APY
- • APR: Simple interest rate without compounding
- • APY: Effective rate including compound interest
- • APY is always ≥ APR (equal only with annual compounding)
- • More frequent compounding = higher APY for same APR
Formula
APY = (1 + APR/n)^n - 1Where n is the number of compounding periods per year
How to Use
- 1Select direction — Choose whether to convert APR to APY or APY to APR.
- 2Enter rate — Input the interest rate as a percentage.
- 3Select compounding — Choose how often interest compounds (daily, monthly, etc.).
- 4View results — See the converted rate and compare across compounding frequencies.
Frequently Asked Questions
What is the difference between APY and APR?
APR (Annual Percentage Rate) is the simple interest rate without compounding. APY (Annual Percentage Yield) includes the effect of compound interest, making it higher than APR for the same nominal rate.
Why do DeFi protocols show APY?
DeFi protocols typically show APY because it represents the actual return you would earn if you reinvest your rewards. Since most DeFi yields compound frequently (often daily), APY gives a more accurate picture.
How does compounding frequency affect returns?
More frequent compounding results in higher effective returns. Daily compounding yields more than monthly, which yields more than annual compounding for the same APR.
What is continuous compounding?
Continuous compounding is the mathematical limit of compounding frequency approaching infinity. It uses the formula APY = e^APR - 1 and represents the maximum possible yield for a given APR.
Are high APY rates sustainable?
Very high APY rates (100%+) are often unsustainable and may indicate high risk. They can come from token emissions that dilute value, or from protocols that may not last. Always research the source of yield.