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Author: Admin | 2025-04-28
You earn through staking in a pool. Here’s a breakdown of each:Annual Percentage Rate (APR)Annual Percentage Rate (APR) represents the basic interest rate earned over one year without considering the effects of compounding.Example APR Calculation for 2 YearsSuppose you invest ₹10,000 in a cryptocurrency staking platform with an APR of 10%.Initial Investment: ₹10,000APR: 10%Since APR does not account for compounding, the interest earned each year is calculated as follows:Interest Earned per Year:Interest Earned = Initial Investment × (APR / 100)Interest Earned = ₹10,000 × (10 / 100)Interest Earned = ₹1,000Interest Earned Over 2 Years:First Year: ₹1,000Second Year: ₹1,000Total Interest Earned Over 2 Years:Total Interest Earned = Interest Earned in Year 1 + Interest Earned in Year 2Total Interest Earned = ₹1,000 + ₹1,000Total Interest Earned = ₹2,000Total Amount at the End of 2 Years:Total Amount = Initial Investment + Total Interest EarnedTotal Amount = ₹10,000 + ₹2,000Total Amount = ₹12,000Annual Percentage Yield (APY)This metric provides a more accurate representation of potential returns by considering the compounding effect of interest. It assumes that all rewards earned throughout the year are reinvested into the pool to generate additional returns. As a result, APY is usually higher than APR for the same staking pool.Example APY CalculationSuppose you invest ₹10,000 in a cryptocurrency staking platform with an APR of 10%, compounded annually.Initial Investment: ₹10,000APR: 10%The difference in this calculation is that APY takes into consideration the compounding effect. To calculate the APY, we use the following steps:Convert APR to Decimal: APR divided by 100,
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