03-17-2022, 05:44 PM
The difference between APR and APY and why staking and lending matters.
<!-- SC_OFF --><div class="md"><p>When you deposit bitcoin or other cryptocurrencies with several exchanges, you can earn interest. When looking for the best interest rates, consider whether the rate is an annual percentage rate (APR) or an annual percentage yield (APY). The distinction is small, but significant, especially when dealing with big volumes.</p> <p>NOTE: ROI is not measured in months, weeks, or days. They are expressed on a yearly basis.</p> <p>The APR, or Annual Percentage Rate, is the rate at which interest is accrued on your initial deposit. It's basically the return you get after a year of lending or staking an asset. The APR number does not take that interest into account if you allow it to compound, rolling the interest into the initial amount, so you're earning interest on your interest.</p> <p>The APY, or Annual Percentage Yield, is the rate of return on an investment after compounding interest is taken into account. It takes into consideration the interest you're earning on that payout. Because the interest has already been considered into the APY, you won't receive any further interest on the interest.</p> <p>So where does staking or lending come in? Well the two are different too.</p> <p>Staking is when you lock up your cryptos and earn passive income while also assisting in the security of the blockchain. As a result, you don't have to do anything and can earn money passively by staking. This is similar to bank interest, but with a significantly higher APY.</p> <p>Lending on the other hand is where you lend your cryptocurrency and receive interest. Counterparty can do anything it wants with it, and hopefully it will be repaid at some point. You can do this with centralized companies, you can lend them your coins, they pay you interest.</p> <p>If you own crypto, I strongly advise you to stake and/or lend it out to get a passive income. The income you earn through staking and lending is significantly larger than anything a bank can offer in today's financial system. Why not increase your passive income by staking or lending your cryptocurrency? The more the merrier.</p> </div><!-- SC_ON --> submitted by <a href="https://www.reddit.com/user/MadlyOpposite"> /u/MadlyOpposite </a> <br/> <span><a href="https://www.reddit.com/r/CryptoCurrency/comments/tg5fmg/the_difference_between_apr_and_apy_and_why/">[link]</a></span> <span><a href="https://www.reddit.com/r/CryptoCurrency/comments/tg5fmg/the_difference_between_apr_and_apy_and_why/">[comments]</a></span>Kind Regards R
<!-- SC_OFF --><div class="md"><p>When you deposit bitcoin or other cryptocurrencies with several exchanges, you can earn interest. When looking for the best interest rates, consider whether the rate is an annual percentage rate (APR) or an annual percentage yield (APY). The distinction is small, but significant, especially when dealing with big volumes.</p> <p>NOTE: ROI is not measured in months, weeks, or days. They are expressed on a yearly basis.</p> <p>The APR, or Annual Percentage Rate, is the rate at which interest is accrued on your initial deposit. It's basically the return you get after a year of lending or staking an asset. The APR number does not take that interest into account if you allow it to compound, rolling the interest into the initial amount, so you're earning interest on your interest.</p> <p>The APY, or Annual Percentage Yield, is the rate of return on an investment after compounding interest is taken into account. It takes into consideration the interest you're earning on that payout. Because the interest has already been considered into the APY, you won't receive any further interest on the interest.</p> <p>So where does staking or lending come in? Well the two are different too.</p> <p>Staking is when you lock up your cryptos and earn passive income while also assisting in the security of the blockchain. As a result, you don't have to do anything and can earn money passively by staking. This is similar to bank interest, but with a significantly higher APY.</p> <p>Lending on the other hand is where you lend your cryptocurrency and receive interest. Counterparty can do anything it wants with it, and hopefully it will be repaid at some point. You can do this with centralized companies, you can lend them your coins, they pay you interest.</p> <p>If you own crypto, I strongly advise you to stake and/or lend it out to get a passive income. The income you earn through staking and lending is significantly larger than anything a bank can offer in today's financial system. Why not increase your passive income by staking or lending your cryptocurrency? The more the merrier.</p> </div><!-- SC_ON --> submitted by <a href="https://www.reddit.com/user/MadlyOpposite"> /u/MadlyOpposite </a> <br/> <span><a href="https://www.reddit.com/r/CryptoCurrency/comments/tg5fmg/the_difference_between_apr_and_apy_and_why/">[link]</a></span> <span><a href="https://www.reddit.com/r/CryptoCurrency/comments/tg5fmg/the_difference_between_apr_and_apy_and_why/">[comments]</a></span>Kind Regards R