# What is the APY?

Let's look at a typical yield farm, where they state an APY (annual percentage yield) as +100% for example.

The traditional definition of APY is the real rate of return earned on an investment taking into account the effect of compounding earnings.

Growth whose rate becomes ever more rapid in proportion to the growing total number or size.

The simple formula for this is growth = (1 + r)^x , where 'r' = return and 'x' = number of 'times'. For example, your money doubles every year if you get 100% yearly return. After 3 years you would have 8x your original investment.

Last modified 10mo ago