Annual Percentage Yield (APY)¶
APY reflects compounded returns to suppliers after protocol reserves. It depends on the borrow rate path, utilization, and the chosen compounding window.
How APY is Derived¶
- Borrow APR comes from the utilization-based curve.
- Supply APR =
borrowAPR * utilization * (1 - reserveFactor). - APY compounds supply APR over time; on-chain accrual is continuous via the index, while UI/APIs may display daily-compounded estimates.
What to Show¶
- Live APY per market using on-chain indexes; note the compounding assumption (continuous vs daily).
- Reserve-adjusted supply APY (post-reserve) and gross borrow APR separately.
- Historical APY chart using realized utilization, not just curve points.
Caveats¶
- Spikes in utilization can create short-term APY swings; highlight this in UI labels.
- For testnets, APY is informational only and can reset on redeploys.
- Always pair APY with health/risk context so borrowers do not infer nonexistent guarantees.