In the world of crypto investing, choosing the right yield metric is as important as learning how to read a map — it can determine whether you truly understand your investment returns. APR and APY are two of the most common but also most confusing concepts; from staking to lending, from DeFi to crypto farms, these two metrics are everywhere. However, many investors have only a superficial understanding of them, and this knowledge gap can lead to misjudgments, ultimately affecting investment returns. This article will delve into what APR is, what APY is, and how to choose the appropriate metric based on your specific situation.
Why mastering APR and APY is crucial for investors
For crypto investors, understanding the fundamental difference between annual percentage rate (APR) and annual percentage yield (APY) is not optional — it’s a prerequisite for making wise investment decisions. Although both metrics describe returns, their calculation methods are entirely different, and the results can vary significantly, especially