As in traditional finances, APY in cryptocurrency refers to the Annual Percentage Yield. It signifies the expected return for any investment choice based on the compound interest formula and not the simple interest rate.
APY is an important factor in the life and journey of a staker/ investor. While calculating APY, we take into account various factors, including:
- Staked amount
- Duration
- Current market prices
Moreover, the global economy also has its own impact on APY. And as is the case with all financial assets, APY of cryptocurrencies should also be adjusted in accordance with inflation. By adjusting inflation, one can get to know the exact yield a crypto token has generated in a year.
APY is thus the daily yield over a year for an asset. It is calculated using the formula:
APY = (1 + daily return rate)^(365) – 1.
APY = P(1 + r)^t, where
- P- Principal investment
- r – Annual interest rate
- T – Time horizon
Cryptocurrencies with the highest APY Crypto staking
This article was originally published by a coingape.com . Read the Original article here. .