StakePoint
Solana DeFi Glossary
Definitions of key terms used in Solana DeFi, token locking, LP locking, and staking. Published by the StakePoint team.
APY (Annual Percentage Yield)
The annualised return on a staking or yield position including compounding effects.
Definition
APY (Annual Percentage Yield) is the annualised rate of return on a staking or yield-generating position, including the effect of compounding. APY accounts for the reinvestment of rewards over time, making it higher than the simple APR for the same position.
In DeFi, APY is commonly used to express the potential return from staking, liquidity provision, or yield farming. High APY figures in DeFi often reflect higher risk — from token price volatility, smart contract risk, or unsustainable reward emission rates.
APY differs from APR in that it includes compounding. A position with 100% APR compounded monthly would have an APY of approximately 161%, because earned rewards are reinvested and also earn returns.
StakePoint & APY (Annual Percentage Yield)
StakePoint staking pools display APR rather than APY as rewards are not automatically compounded. Pool creators set the reward rate and stakers earn rewards based on their share of the pool and the configured APR.
Related Pages
Frequently Asked Questions
What is APY in DeFi?
APY is the annualised return on a DeFi position including compounding effects. It is higher than APR for the same position because it accounts for reinvested rewards.
What is the difference between APY and APR?
APR is the simple annualised rate without compounding. APY includes compounding — reinvesting earned rewards so they also generate returns.
Related Terms
APR (Annual Percentage Rate)
The simple annualised rate of return on a staking position without compounding.
Staking Pool
An on-chain contract where token holders deposit tokens to earn rewards.
Staking Rewards
Tokens earned by stakers for locking tokens in a staking pool.
Solana DeFi
Decentralised finance applications built on the Solana blockchain.
DeFi Yield
Returns generated by providing liquidity, staking, or lending in decentralised finance protocols.