Staking APYs are not APRs

This may be common knowledge for many people here, but there is a significant difference between APR (annual percentage rate) and APY (annual percentage yield). APR does not take into account compounding interest, APY does. So when you see a figure for estimated APY when staking, this is the estimated yield one year from today, compound interest included.

So say you are calculating how your balance will grow over time, if you apply the APY figure compounding on a daily or weekly basis, you’re actually double counting compound interest, as this is already built into the APY formula.

Not going to make a huge difference on small balances, but if you have a significant amount invested, it could really throw off your staking projections, especially if you’re trying to beat inflation rates in something like ADA or ATOM.

EDIT: As u/camehere2 pointed out, you have to stake the rewards you get to earn that full APY, vs a savings account at a bank which automatically compounds over time. Thanks for the contribution!