APY and APR

APR, which stands for Annual Percentage Rate, is the interest rate on an account. It is calculated on a yearly basis and shown as a percentage.

APY, which stands for Annual Percentage Yield, is the rate you can earn on an account over a year and it includes compound interest.

Generally in most DeFi protocols when a user stakes his assets to generate yield, the yield that is generated is auto re-invested into the respective liquidity pools.

When utilizing lending protocols it is important to understand how much interest you're being charged on your loan and whether or not your investment strategy will enable you to repay your loan. Certain assets have a variable interest rate, meaning the interest rate changes depending on market conditions.