Most staking platforms show a big, bright yield number — but they don't always tell you whether it's APR or APY. That distinction quietly changes how much you actually earn.
What Each Term Means
APR (Annual Percentage Rate) is simple interest. If a protocol offers 10% APR and you stake 1,000 tokens, you earn 100 tokens over a year. Straightforward.
APY (Annual Percentage Yield) factors in compounding — the process of earning rewards on your rewards, not just on your original amount. With 10% APY compounded monthly, each month's rewards get folded back into your balance, and next month you earn a little more than the month before. By year-end, your total return is slightly higher than a flat 10% would produce.
The gap between APR and APY grows wider the more frequently compounding happens. Compound daily, and the difference is larger than compounding monthly. Compound once a year, and APR and APY are identical.
A Concrete Example (No Invented Numbers)
Imagine two protocols both advertise "10%" on a token you hold. Protocol A means 10% APR — simple, no reinvestment. Protocol B means 10% APY, compounded daily — rewards are automatically restaked for you every day.
Over a full year, Protocol B produces a meaningfully higher return, even though the headline number looks the same. The gap is small at 10%, but at higher rates — say, triple-digit APYs — compounding frequency makes an enormous difference to the final figure.
This also works in reverse. A platform showing a very high APY might be using aggressive compounding assumptions to make a modest APR look impressive on the label.
What to Check Before You Compare
When you look at any staking opportunity, ask two questions: Is this number APR or APY? And how often does compounding actually happen — automatically, or only when you manually reinvest?
Some protocols compound for you; others require you to claim and restake rewards yourself, which means the real-world result depends entirely on how often you do it.
You can see how yields are labelled across different protocols in the comparison table — comparing like-for-like is much easier once you know which type of number you're actually looking at.