APY stands for Annual Percentage Yield. In crypto, it is often used to describe possible yearly returns from staking, lending, liquidity pools, or other reward programs.
Why crypto APY can be confusing
Crypto APY may include token rewards, compounding assumptions, temporary incentives, or promotional rates. A high APY can shrink quickly if rewards change or the token price falls.
APY is not guaranteed profit
Even when a protocol pays rewards, users may face token volatility, smart contract risk, impermanent loss, withdrawal limits, or platform failure.
APY is useful as a comparison number, but it should be read with the reward source and risk model behind it.