What is APR (Annual Percentage Rate)?
The yearly interest rate earned on an investment without compounding.
APR (Annual Percentage Rate) Explained
APR, or Annual Percentage Rate, represents the simple interest rate you earn on your investment over one year. Unlike APY, APR does not account for the effects of compounding. In DeFi, APR is commonly used to display staking rewards, liquidity provision returns, and lending rates. When comparing protocols, understanding the difference between APR and APY helps you accurately assess potential returns.
Key Characteristics
- Does not include compound interest
- Easier to calculate than APY
- Commonly used in DeFi staking displays
- Can be converted to APY with compounding frequency
Real-World Example
If Floops offers 20% APR on staking, depositing 1000 FLPS tokens would earn you 200 FLPS by the end of the year (without reinvesting rewards).
Related Terms
Frequently Asked Questions
What does APR (Annual Percentage Rate) mean?
The yearly interest rate earned on an investment without compounding.
How does APR (Annual Percentage Rate) work in DeFi?
APR, or Annual Percentage Rate, represents the simple interest rate you earn on your investment over one year. Unlike APY, APR does not account for the effects of compounding. In DeFi, APR is commonly used to display staking rewards, liquidity provision returns, and lending rates. When comparing protocols, understanding the difference between APR and APY helps you accurately assess potential returns.
Can you give an example of APR (Annual Percentage Rate)?
If Floops offers 20% APR on staking, depositing 1000 FLPS tokens would earn you 200 FLPS by the end of the year (without reinvesting rewards).
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