# APY

> Annual percentage yield. The yearly return on a deposit, including the effect of compounding.

Canonical URL: https://fudfomo.co/glossary/apy
Source: What The Block! Dictionary v1.0 (last updated 2026-04-25), browsable at https://wtb.fudfomo.co.

## Definition

APY shows what you would earn over a year on a deposit if returns were paid out and reinvested at the same rate. Because it includes compounding, APY is always at least as high as APR for the same underlying rate.

Crypto APYs change constantly as users deposit and withdraw or as token rewards rise and fall. A headline APY is a snapshot, not a promise.

## Related terms

- [APR](https://fudfomo.co/glossary/apr): Annual percentage rate. The yearly return on a deposit, before compounding.
- [Yield Farming](https://fudfomo.co/glossary/yield-farming): Moving crypto between DeFi apps to earn the highest rewards. Higher yields usually mean higher risk.
- [DeFi](https://fudfomo.co/glossary/defi): Decentralised finance. Apps that offer lending, trading, and saving on a blockchain instead of through a bank.
- [Lending Protocol](https://fudfomo.co/glossary/lending-protocol): A DeFi app that lets users deposit crypto to earn interest and others borrow against collateral.

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