What Does APR in Crypto Mean for Your Investments?

When you’re earning yield through staking, liquidity pools, or yield farming, you’ll often see APR (Annual Percentage Rate) displayed. But what exactly does this figure tell you about your potential returns?

APR Explained: The Simple Version

APR in crypto represents the annual interest you’d earn on an investment or pay on a loan, without accounting for compounding effects. Think of it as the straightforward yearly rate applied to your investment capital. If a crypto savings account offers 10% APR, that means you’d earn 10% interest on your initial amount over one year—calculated on a simple, linear basis.

Where You’ll Encounter APR in Crypto

You’ll run into APR across multiple yield-generating opportunities:

• Staking: When you lock up tokens to secure a network, the rewards are often displayed as APR
• Liquidity pools: Decentralized exchanges typically show APR for providing liquidity
• Yield farming: Different farming strategies display their returns as APR
• Crypto savings accounts: These platforms quote APR just like traditional banks

APR vs. APY: Know the Difference

This is where it gets important. APY (Annual Percentage Yield) includes the power of compounding, meaning you earn interest on your interest. APR does not. Over time, this makes a real difference—APY typically shows a higher return than APR for the same investment, because it accounts for how frequently rewards are reinvested.

So when comparing yield opportunities in crypto, always ask: is this APR or APY? That single letter matters more than you might think.

The Practical Takeaway

APR tells you the annual interest without compounding math getting involved. It’s useful for quick comparisons, but remember to check whether the platform reinvests rewards automatically (which would make APY the more accurate figure). Understanding the difference helps you make smarter choices when selecting where to put your crypto to work.