APY(Annual Percentage Yield) and APR(Annual Percentage Rate) are metrics that express the returns on your investment. But let's take it one after the other.

APR is an returns earned when your crypto is made available to borrowers. In simpler terms in decentralized finance, if borrowers are paying 8% annual interest on Bitcoin they borrowed, the lender will receive 8% APR reason been that there wont be anything like platform fees charged.

APR on centralized exchanges are most time a little lower because there are middlemen, which translates to the fact that the exchange will remove a commission for linking the borrower to the lender together on the platform.

Lets assume you make your crypto (equal in value to 10,000 USD) available for a loan for three years, and it has a return of 10% APR.

Each year, you will make a return of 10% of the original sum loaned out, which is 1000 USD. So by the end of a three-year investment period, you will have made 3000 USD, and you’ll also have your original sum of 1000 USD back too .

I am sure you now clearly know the meaning of APR.

Now lets get directly to what APY means

APY (Annual Percentage Yield) simply put is the interest rate that you receive on an investment when both the principal sum and the interest on that sum are compounded. which means that your crypto investment is generating interest and the interests are also generating interest too. APY gives an ROI that is quite more than what APR gives.

For instance, lets assume you make an investment of 10,000 USD for three years and it has a return of 10% APY. The compounding period and the frequency at which the interest is recalculated is every 365days.

Each 365days, you’ll make 10% interest on both the original sum paid and the interest itself. 

Year 1: 10% of 10,000 = 1000.00

Year 2: 10% of 11,000 = 1100.00

Year 3: 10% of 12,100 = 1210.00

Here, for the exact same sum and interest rate, you would have made 3310.00 USD in yield. This is because the calculation included both the principal sum and the interest accruing on that sum.

In summary, the difference between APY and APY simply translates to the fact that APR is a simple interest earned on your savings while APY is a compound interest earned on your crypto savings.

In some cases, you can stake your coin for a period of 7 days, 30 days, or 3 months. However, there are different crypto saving options;

• Flexible Savings: It works like a traditional bank savings account, you can withdraw your coin at any time without prior notice. But the APR is usually low.
• Fixed Savings: It is the opposite of flexible savings, the reward is higher but you cannot withdraw your coin once it is staked for a specific time. You have to wait till the countdown is over. This is a great option if you have the intention to keep your coin for the long term.

Conclusively, They actually presents unprecedented freedom and to an extent, unprecedented rewards for users. But it also comes with risks, where users may stand to make substantial rewards, but their locked liquidity may be subject to permanent loss among other things. And in an ecosystem where projects are free to launch without scrutiny, some projects are clever vehicles for rugpulls, where developers accumulate crypto from hopeful users and then abandon the project. 

So, it is paramount that when you want to join any crypto savings/staking program, make sure that you have done your own research quite well to avoid story that touch, be aware of the staking fees, cost of staking when the staking period is not over, and the potential of rug pull, tokenomics, and also project credibility.

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