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Web3

APY (Annual Percentage Yield)

The real rate of return earned on a deposit or investment over one year, including the effect of compounding interest. Unlike APR, APY accounts for interest being reinvested and earning additional interest over time. In DeFi, APY figures are often projected from short-term returns and can fluctuate significantly. A 10% APY means a deposit grows by 10% over a year if rates remain constant and rewards are continuously compounded.

IDapyAliasAPY
Plain meaning

Plain meaning

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The real rate of return earned on a deposit or investment over one year, including the effect of compounding interest. Unlike APR, APY accounts for interest being reinvested and earning additional interest over time. In DeFi, APY figures are often projected from short-term returns and can fluctuate significantly. A 10% APY means a deposit grows by 10% over a year if rates remain constant and rewards are continuously compounded.

Mental model

Mental model

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APY (Annual Percentage Yield) (apy)
Category: Web3
Definition: The real rate of return earned on a deposit or investment over one year, including the effect of compounding interest. Unlike APR, APY accounts for interest being reinvested and earning additional interest over time. In DeFi, APY figures are often projected from short-term returns and can fluctuate significantly. A 10% APY means a deposit grows by 10% over a year if rates remain constant and rewards are continuously compounded.
Aliases: APY
Related: APR (Annual Percentage Rate), Yield Farming, DeFi (Decentralized Finance)
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Concept graph

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Branch

APR (Annual Percentage Rate)

The simple annual interest rate earned on a deposit or paid on a loan, without accounting for compounding. APR represents the base rate before reinvestment of earnings. In DeFi lending protocols, APR is the straightforward percentage you earn or owe per year. APR is always lower than or equal to APY for the same rate, because APY includes the compounding effect. A 10% APR on 1000 SOL means you earn exactly 100 SOL over a year.

Lending Protocol
Open term
Branch

Yield Farming

The practice of deploying tokens across DeFi protocols to maximize returns through trading fees, lending interest, and token incentive rewards. Farmers often move capital between protocols chasing the highest APY. On Solana, common strategies include LP provision on Orca/Raydium, lending on Kamino/MarginFi, and staking LP tokens in reward farms.

Liquidity PoolStaking
Open term
Branch

DeFi (Decentralized Finance)

Financial services built on blockchain smart contracts that operate without traditional intermediaries (banks, brokers). DeFi includes lending, borrowing, trading, insurance, and derivatives. Key properties: permissionless (anyone can participate), composable (protocols can be combined), transparent (open-source, auditable). Solana DeFi TVL has exceeded $5B, led by Jupiter, Raydium, Marinade, and Kamino.

AMM (Automated Market Maker)DEX (Decentralized Exchange)
Open term
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Web3

APR (Annual Percentage Rate)

The simple annual interest rate earned on a deposit or paid on a loan, without accounting for compounding. APR represents the base rate before reinvestment of earnings. In DeFi lending protocols, APR is the straightforward percentage you earn or owe per year. APR is always lower than or equal to APY for the same rate, because APY includes the compounding effect. A 10% APR on 1000 SOL means you earn exactly 100 SOL over a year.

Open term
DeFi

Yield Farming

The practice of deploying tokens across DeFi protocols to maximize returns through trading fees, lending interest, and token incentive rewards. Farmers often move capital between protocols chasing the highest APY. On Solana, common strategies include LP provision on Orca/Raydium, lending on Kamino/MarginFi, and staking LP tokens in reward farms.

Open term
Web3

DeFi (Decentralized Finance)

Financial services built on blockchain smart contracts that operate without traditional intermediaries (banks, brokers). DeFi includes lending, borrowing, trading, insurance, and derivatives. Key properties: permissionless (anyone can participate), composable (protocols can be combined), transparent (open-source, auditable). Solana DeFi TVL has exceeded $5B, led by Jupiter, Raydium, Marinade, and Kamino.

Open term
Web3

Bagholder

Someone stuck holding a depreciating asset, either refusing to sell at a loss or having missed their exit opportunity. A 'bag' is a position in a specific token, especially one that has declined significantly from the purchase price. Bagholders often rationalize holding by citing long-term potential, but the term is generally pejorative and implies the position is unlikely to recover.

Open term
Commonly confused with

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Web3yield-return

Yield / Return

The profit earned from participating in DeFi activities such as providing liquidity, lending tokens, staking, or farming rewards. Yield is typically expressed as an annualized percentage (APY or APR) and can come from multiple sources: trading fees shared with liquidity providers, token emissions from protocols, interest paid by borrowers, or staking rewards from validators. Returns vary widely by risk level and market conditions.

AliasYieldAliasReturn
Open term
Web3apr

APR (Annual Percentage Rate)

The simple annual interest rate earned on a deposit or paid on a loan, without accounting for compounding. APR represents the base rate before reinvestment of earnings. In DeFi lending protocols, APR is the straightforward percentage you earn or owe per year. APR is always lower than or equal to APY for the same rate, because APY includes the compounding effect. A 10% APR on 1000 SOL means you earn exactly 100 SOL over a year.

AliasAPR
Open term
Related terms

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Web3apr

APR (Annual Percentage Rate)

The simple annual interest rate earned on a deposit or paid on a loan, without accounting for compounding. APR represents the base rate before reinvestment of earnings. In DeFi lending protocols, APR is the straightforward percentage you earn or owe per year. APR is always lower than or equal to APY for the same rate, because APY includes the compounding effect. A 10% APR on 1000 SOL means you earn exactly 100 SOL over a year.

Open term
DeFiyield-farming

Yield Farming

The practice of deploying tokens across DeFi protocols to maximize returns through trading fees, lending interest, and token incentive rewards. Farmers often move capital between protocols chasing the highest APY. On Solana, common strategies include LP provision on Orca/Raydium, lending on Kamino/MarginFi, and staking LP tokens in reward farms.

Open term
Web3defi-general

DeFi (Decentralized Finance)

Financial services built on blockchain smart contracts that operate without traditional intermediaries (banks, brokers). DeFi includes lending, borrowing, trading, insurance, and derivatives. Key properties: permissionless (anyone can participate), composable (protocols can be combined), transparent (open-source, auditable). Solana DeFi TVL has exceeded $5B, led by Jupiter, Raydium, Marinade, and Kamino.

Open term
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Web3

Web3

The vision of a decentralized internet built on blockchain technology, where users own their data, identity, and digital assets. Web1 was read-only (static pages), Web2 is read-write (platforms like social media), Web3 is read-write-own (permissionless, user-sovereign). Web3 applications use wallets instead of logins and smart contracts instead of centralized servers.

Open term
Web3

dApp (Decentralized Application)

An application with its backend logic running on a blockchain as smart contracts rather than centralized servers. dApps typically have a traditional web frontend that interacts with on-chain programs via RPC. Users authenticate with wallets instead of username/password. Examples: Uniswap (Ethereum DEX), Jupiter (Solana DEX), Magic Eden (NFT marketplace).

Open term
Web3

Wallet

Software or hardware that manages cryptographic keys and enables users to sign transactions, view balances, and interact with dApps. Hot wallets (Phantom, Solflare, Backpack) are internet-connected for convenience. Cold wallets (Ledger, Trezor) store keys offline for security. Wallets don't actually 'hold' tokens—they hold the private keys that control on-chain accounts.

Open term
Web3

Seed Phrase (Mnemonic)

A 12 or 24-word human-readable backup of a wallet's master private key, generated using BIP-39 standard. The seed phrase can deterministically regenerate all derived keypairs (BIP-44 derivation paths). Losing the seed phrase means permanently losing access to all associated accounts. Never share, photograph, or store seed phrases digitally in plain text.

Open term