All terms Investing, Income and ValuationCross reference

Annual Percentage Yield (APY)

Annual Percentage Yield, usually shortened to APY, expresses an annualized rate of return while taking the effect of compounding into account. It is commonly used across savings products, DeFi and other yield generating investments.

Why it matters to you

APY makes different yields easier to compare, but the headline percentage does not tell you how risky the investment is or whether the rate will remain available. Investors should understand where the yield comes from, whether it is fixed or variable and what risks are being taken to generate it.

Terms that sit next to this one

Compound Interest

Where this comes up

An RWA Pays 10% a Year. What Happens if the Asset Falls 20%?8 min
When you’re looking at a tokenized investment paying 10% a year, it’s easy to picture what that income could do for you. Put in $20,000, and you could receive $2,000 over the year.

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Our RWA course. Chapter 1 is free.