APR
Annual Percentage Rate — simple annual rate without compounding. The base rate that APY calculations are derived from and the most honest number for comparing offers.
Aliases: annual percentage rate, simple annual rate
APR (Annual Percentage Rate) is the simple annual rate. At an APR of 12% with no reinvestment, you earn exactly 12% of the principal over a year. It is the baseline rate the protocol pays before any decision to compound.
How it differs from APY
APR is the rate credited. APY is the rate realised if every period is immediately reinvested. The gap is tiny over short periods (5% APR ≈ 5.127% APY at daily compounding) and widens exponentially over long horizons.
Example: 100 USDT at 10% APR for five years.
- No compounding: 100 + 5 × 10 = 150 USDT.
- Monthly compounding (APY ≈ 10.47%): ≈ 164.53 USDT.
Where APR is the right metric
- Borrowing cost. Lending protocols (EVAA, Storm) quote APR because the borrower pays raw interest; the borrower is not the one reinvesting it.
- Emission rewards. “We pay STON at 50% APR” describes emission volume without compounding assumptions.
- CEX savings products. Exchanges typically quote APR on simple savings.
Where APY is the right metric
- Liquid-staking protocols.
- Lending deposits with auto-compounding.
- Any strategy where yield immediately recycles into the same position.
Marketing tricks
- Show APY instead of APR so the headline number looks bigger.
- Quote APR using a momentary farm multiplier with no regard for future unlocks.
- Hide that part of the “yield” is paid in a depreciating emission token rather than the base asset.
For a sober comparison, normalise everything to one format. APR is preferable because compounding is a calculation you can do yourself.