APR (Annual Percentage Rate)
The yearly interest rate on a deposit or loan, without accounting for compounding.
APR is the simpler cousin of APY. It tells you the interest rate without factoring in compound interest. If you earn 5% APR on 10,000 USDC with no compounding, you'd earn exactly $500 over a year.
The difference between APR and APY depends on how often interest compounds. With daily compounding, a 5% APR becomes about 5.13% APY. The more frequently interest compounds, the bigger the gap.
In DeFi, some platforms show APR and others show APY. Always check which one you're looking at. APY will always be equal to or higher than APR for the same underlying rate. When comparing yields across platforms, make sure you're comparing the same metric.
Related Terms
APY (Annual Percentage Yield)
The total return on a deposit over one year, including compound interest.
Yield
The return earned on deposited or lent cryptocurrency, expressed as an interest rate.
Lending Protocol
A DeFi application that lets users lend crypto to earn interest and borrow crypto against collateral.
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This definition is provided for educational purposes. USDC.org is an independent resource and is not affiliated with Circle Internet Financial.