APY (Annual Percentage Yield)

APY accounts for compounding, which means you earn interest on your interest. If a platform offers 5% APY on USDC, and you deposit $10,000, you'd earn about $500 over a year (assuming the rate stays constant).

APY differs from APR (Annual Percentage Rate), which doesn't include compounding. A 5% APR with daily compounding works out to about 5.13% APY. In crypto, platforms usually advertise APY.

Important: DeFi yields are variable. A protocol might show 8% APY today and 3% next week. The number you see is typically based on recent performance, not a guaranteed rate.