Understanding the Real Value of APY in Crypto and DeFi

In early May, the tgUSD project was discussed, and initially, it boasted an APY exceeding 60%. However, this figure quickly decreased to a more realistic 9%. This serves as a reminder for beginners to approach high APY claims with skepticism, as they can be misleading and lead to disappointment if expectations are not met. The concept of APY (annual percentage yield) applies to interest-bearing deposits, meaning if a service offers a 5% APY, depositing 100 USDT would yield 105 USDT after a year. However, high APY percentages, such as 100%, often originate from short-term promotions or marketing tactics rather than guaranteed yearly returns. For example, a staking offer for 8 days at 100% APY would only grow the investment by about 2.19% over those days. Moreover, APY changes over time, and initial high rates may not be sustained. If the rate isn’t fixed, the stated APY is often just a snapshot, not a promise of constant interest. Recognizing this, experienced users understand that such high APYs might be promotional or short-term opportunities, not guaranteed income. Being realistic about the nature of APY helps avoid disillusionment and enables better decision-making.