What is APY?

APY is the annualized rate of return on an investment, which takes into account compound interest that accrues or grows with the balance. Compound interest includes the interest earned on the initial deposit plus the interest earned on that interest.

While often associated with traditional savings, APY is a key metric for crypto savings plans and works similarly. Crypto investors can earn APY by staking cryptocurrencies, depositing them in savings accounts, or providing liquidity to liquidity pools through yield farming.