The annual percentage rate (APR) in the world of crypto is how interest from investment products or loans in the market is calculated. An APR can denote the interest rate you pay when you invest your cryptocurrencies in liquidity pools, staking, yield farming, crypto savings accounts, and more.
An annual percentage rate is the normal interest rate applied to the principal amount of your investment or loan. This annualized figure does not use the principle of compounding interest and can be adjusted on a pro-rata basis for less than one year.
APR (Annual Percentage Rate) is the annual rate charged for borrowing or earned through an investment, without taking compounding into account, while APY (Annual Percentage Yield) takes into account the effects of compounding, thus often providing a more accurate picture of the total yearly cost or return.
If you lend your crypto to an investment product, an APR will tell you how much interest you can earn on the particular investment offering. On the other hand, if you borrow or take a crypto loan, the APR will tell you how much interest you pay on the loan amount you have availed for one year.
