📈APR vs APY

APR

Annual percentage rate (APR) expresses the yield a user will earn on the initial value they entered in a vault. This does not include interest earned on the previously earned yield.

APR Calculation:

$APR = P * T$

P - Periodic Rate

T - Time in Vault

APY

Annual percentage yield (APY) expresses the total yield a user will receive after a year of holding his assets in a vault, factoring in compound interest. This means that the yield previously earned with be put to work and will now earn yield too.

APY Calculation:

$APY = (1 + r/n)^n - 1$

r - Rate of interest for the period

n - the amount of compounding periods