Crypto APY calculator - know your earnings!
Most crypto exchanges offer you the chance to stake your coins for a specific period of time with a fixed APY. However, while the interest you can earn is represented by APY, the staking terms are mostly shorter.
This means that it might be confusing to understand how much can you actually earn. That's where this simple crypto APY calculator will hopefully make your life a lot easier.
Understanding the concept of APY (Annual Percentage Yield)
What is APY?
APY is short of Annual Percentage Yield. It is the rate of return offered over a course of a year for some specific investment. The term APY is often used when talking about crypto staking. APY in crypto is an easy way to see how interest accumulates over a course of year.
To put it in simplest terms possible - Annual percentage yield (APY) shows how much you can earn from your specific assets.
APY factors in also the compound interest. This means that APY usually also includes the earnings from the already earned interest.
Crypto APY vs APR - What is the difference between the two?
In addition to APY you might sometimes also come across something called APR. APR is short for Annual Percentage Rate.
APR shows your earnings from your invested assets during one year.
So what's the difference between APY and APR?
There's mainly just one, although important, difference.
APR doesn't include compounding - the interest earned from your already earned interest.
How do you calculate APY?
In order to calculate your potential earnings when staking your coins, you need to know two main things:
- APY (this is provided by the exchange or crypto platform)
- Period (for how long can you earn this APY). Normally it's anywhere from 10 days to four months.
Then you can use the following formula:
Your Actual Earnings = (Principal x APY / 365) X Period
- Principal is the amount of money you put in.
- APY is the percentage you can earn during one year.
- Period is the number of days you are actually staking your coins for
14-day APY interest calculation
So let's say you invest 1000 Dogecoins with an APY of 30% for 14 days.
Your Actual Earnings = (1000 x 0.3 / 365) x 14 = 11.5
This means that you can earn roughly 0.82 DOGE in a day, or over 11 DOGE during the two-week period.
Of course, this doesn't factor in compounding. Compounding depends on how often the interest is added to the principal.
7-day APY interest calculation
We could also try the same parameters, but just with 7-day staking.
Your Actual Earnings is this case would be (1000 x 0.3 / 365) x 7 = 5.75
Again, this doesn't factor in compounding.
How to use this crypto APY calculator?
- Enter the principal amount. Just write a number. It doesn't matter what the number represents - USD, EUR, BTC, or whatever else. Just keep in mind that the result will be in the same currency then as well.
- Enter APY
- Enter time period
- Choose if you plan to take your interest out daily or you leave it for compounding. In case of the latter the apy calculator will assume interest is paid out daily.
Factors to consider when using an APY calculator
On the other hand, if you're getting very high APY and the crypto price is going up as well, that's a perfect version.
The benefits of using an APY calculator
Imagine getting 30% APY for a week from an investment of $1000. If you'd know what APY even means, you might expect to receive 30% profit from your initial capital.
If you get 300% APY for seven days, you get over $50. That's roughly 5% from your investment in a week.
Real-life examples of APY calculations for popular cryptocurrencies
- You get 10% APY for Bitcoin investment for a year. During that time, Bitcoin price increases by 10% as well. So you'll end up with with roughly $1210 ($1000 investment + $100 from APY + $110 from price increase)
- You get 300% APY for PAF cryptocurrency. During that time, Paf price goes down 80%. So you'll end up with $800 ($1000 from your investment, $3000 from APY, minus $3200 from price decrease).
As you can see, the 10% APY for Bitcoin would have actually earned money while 300% APY for PAF would have lost you money by the end of the year.
So always, keep in mind that the actual asset matters more than the size of the APY.
Is APY always calculated the same way?
In theory yes. Our crypto APY staking calculator uses the most commonly used formula. And in generally it should show the same results as any actual earnings you might get from crypto exchanges by staking your coins. However, we can not make any guarantees. Always pay attention to the details on the platform where you're staking your coins.
It is also important to be aware that sometimes the APY is not fixed, but can change over time.
Are there any risks involved with staking your coins?
Staking your coins with very high APY is very tempting. Sometimes you might even want to buy new coins just to stake them for high APY. And it makes sense.
However, you always need to keep in mind that while you can sometimes even earn 100% interest per month, the price of the coin might go down so much that even your staking interest won't cover the half of it.