In the rapidly changing world of cryptocurrency, investors need to master core yield calculation tools to evaluate investment returns. The Annual Percentage Yield (APY) is a key indicator that helps investors make more precise decisions in passive income strategies. This article will explore the essence of cryptocurrency APY from multiple dimensions, including basic concepts, calculation principles, and market applications.
What is Annual Percentage Yield? Basic Concept Explanation
Annual Percentage Yield (APY) is essentially a method of calculating returns that takes into account the effects of compounding. Unlike simple interest, which only applies to the principal, APY reflects the earnings over an entire interest period, including the benefits of reinvested interest.
For example, suppose you deposit $10,000 in a traditional bank with an annual interest rate of 6%, but the bank compounds interest monthly. Instead of just calculating 6% (which would be $600),