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馃挵 APR vs APY 馃 YIELD FARMING WHY IT WORKS 馃挷 Staking crypto lets compound interest work for you - YouTube
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all right apr versus apy i want to make this real聽
easy so that all of you can understand and teach聽聽
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others because the goal here is not only for you聽
to learn something but for you to be able to teach聽聽
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it to somebody else at the end of the day apr is聽
the basics it's how much money you're going to get聽聽
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at the end of one year by putting an聽
investment in so let's say you put聽聽
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you know you put down an investment of ten聽
thousand dollars and you have a apr of ten percent聽聽
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at the end of that first year you're going聽
to get back 1 000 yet pretty simple pretty聽聽
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straightforward now that's not good you don't聽
want that what you want it to look at is the apy聽聽
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because unlike apr you're going to be including聽
everything so if you have any fees associated聽聽
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with that transaction if you're actually聽
getting paid out on a consistent basis so聽聽
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compound interest is your best friend and this is聽
where real money actually gets generated and i'm聽聽
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going to go into us a few charts so you can see聽
an example of what this looks like but let's talk聽聽
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about yield farming that's why we're here right so聽
when it comes to yield farming take a look at this聽聽
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a lot of sites will just list the聽
harvest apy this here is harvest finance聽聽
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so there their whole thing is harvesting so you're聽
getting 355 apy which is great but it doesn't go聽聽
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in depth as far as what does that actually mean聽
if we move over to the next one here we have ape聽聽
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rocket now i like the way they do this they give聽
you the um the apy up top but they also give you聽聽
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the apr on the bottom so it gives you a little bit聽
better understanding as far as how this works um聽聽
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because on the top what you're doing is actually聽
reinvesting the gains that you've acquired in to聽聽
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um more gains so you get the money that you got聽
and then you put it back in that's how the apy is聽聽
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kind of coming about because of compound interest聽
now my favorite of all these is it's got to be ape聽聽
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swap because apeswap you know next to all of these聽
aprs because these are all aprs and they're pretty聽聽
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um good with this there's this little yellow聽
box now if you click here you're going to see聽聽
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this this chart that shows you what your return聽
on investment is and the last one is your apy聽聽
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which is the return on investment after one full聽
year you're actually earning i got to go back to聽聽
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this because this is great so 323 right now if we聽
look at the apu why we're going to actually earn聽聽
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2 403 and this is because of compound interest聽
it's because you're reinvesting the money that聽聽
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you're acquiring because they're paying聽
you out on a daily basis which is awesome聽聽
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this is what you want to see so let's talk about聽
a real life example how can you better understand聽聽
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this so i have a little slide here to to go聽
over here's an example we're going to look at聽聽
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a one-time investment so you're putting down 15聽
000 once the apr is 150 which is totally doable聽聽
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when it comes to um cryptocurrencies and we're聽
going to look at over three years let's talk聽聽
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about long-term investments and just how big of聽
an impact the uh the rate can really have and if聽聽
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you really know what you're doing you're going to聽
look at the api and you're going to start telling聽聽
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everybody what's the apy i don't think about the聽
apr because that doesn't include you know when it聽聽
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comes to loans doesn't include fees does include聽
anything apy will tell you the true story what's聽聽
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really happening and before i get into that if you聽
wouldn't mind hit that like button it will go a聽聽
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long way to helping the channel and educating聽
more people when it comes to cryptocurrencies聽聽
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finances in general just make sure that you all聽
are being successful long term as we get right聽聽
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back into this so 15 000 150 apr over three聽
years here's what this is going to look like
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two hundred and thirty four thousand dollars聽
after three years by simply putting down聽聽
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fifteen thousand dollars at聽
a hundred and fifty percent聽聽
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apr now here's the thing this apr is actually聽
an apy because when you're getting paid on a聽聽
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yearly basis that's when you're reinvesting in聽
so essentially this one is an apr and an apy聽聽
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all-in-one because it's compounding yearly now聽
if we take this a step further and we take a look聽聽
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at compounding quarterly your gains just they聽
they start to go up way way quickly so 685 000聽聽
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just by instead of getting paid out once a聽
year if the interest is being compounded on聽聽
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a quarterly basis this is just if you're getting聽
paid four times a year as opposed to once a year聽聽
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now taking that to the next level let's talk about聽
what happens when it's 12 times a year so monthly聽聽
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your gains in three years just with聽
a fifteen thousand dollar investment聽聽
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goes up to a million dollars yeah farming is worth聽
it yield farming is the thing because it makes聽聽
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you a lot of money as long as you're investing聽
in the right thing and making sure that you're聽聽
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putting money on things that are trustworthy and聽
not you know projects that are just going to get聽聽
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you know get get the rug pulled from under it so聽
make sure you know what you're investing in but聽聽
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compound interest is your friend when it comes聽
to these things last but not least this is the聽聽
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most common when it comes to yield farming and聽
why it's so profitable because if you compound聽聽
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daily your fifteen thousand dollars in three years聽
becomes 1.3 million dollars that's a lot of money聽聽
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that's a lot of money so if you're able to yield聽
farm if you're able to put a little bit aside聽聽
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to get a good return long term this is so worth聽
it and i can't preach enough about yield farming聽聽
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because it's the way for you to earn a really good聽
passive income as long as you invest in things聽聽
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that you know are going to give you a good return聽
in your investment so taking a look at the numbers聽聽
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let's put this chart one on top of the other look聽
at this it is exponential the rate at which your聽聽
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uh your gains just take off it's it's exponential聽
you can see that that curve is just going straight聽聽
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on up as opposed to that little blue one where聽
you're only getting paid once a year so compound聽聽
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interest it's your friend take a look at this聽
chart here it's a big difference here's what the聽聽
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real apy is based on your compounding schedule if聽
it's yearly it's just the same as an apr if you go聽聽
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quarterly it jumps up to 257 percent that's that's聽
big monthly so 12 times a year now you're at 310聽聽
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almost 311 there daily you're at 346 almost 47聽
that's a huge number in comparison to what you聽聽
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would you know otherwise get with just your yearly聽
payouts and your apr so be careful and be aware聽聽
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of what it is that people are promising you and聽
what you're reading on the site because your apy聽聽
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is going to tell you the true story if you're only聽
looking at an apr that's how people are making聽聽
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money off of other people so be careful with that聽
guys thank you so much and i know i've said it聽聽
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once but i'll say it again if you wouldn't mind聽
liking this video but if you don't mind sharing聽聽
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with somebody that wants to know what an apr and聽
apy really looks like and how it impacts yield聽聽
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farming this would be a great opportunity for聽
them to learn and also a great opportunity to聽聽
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grow the channel and reach more people thank you聽
so much and i will see you guys on the next one
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