Lending APY Calculator
Compare crypto lending rates across Aave, Compound, and MakerDAO by token and duration. Enter values for instant results with step-by-step formulas.
Formula
A = P × (1 + APY/365)^days
Earnings are calculated using daily compound interest. The principal (P) grows each day by the daily rate (APY / 365), compounded over the total number of days. This formula accounts for the compounding effect that makes APY higher than simple interest APR.
Worked Examples
Example 1: Stablecoin Yield Comparison
Problem: You have 10,000 USDC to lend for 365 days. Compare earnings across Aave (4.5% APY), Compound (4.2% APY), and MakerDAO DSR (5.0% APY).
Solution: Aave: 10,000 × (1 + 0.045/365)^365 - 10,000 = $460.25\nCompound: 10,000 × (1 + 0.042/365)^365 - 10,000 = $428.93\nMakerDAO: 10,000 × (1 + 0.05/365)^365 - 10,000 = $512.67\nDifference: MakerDAO earns $84.42 more than Compound
Result: MakerDAO best at $512.67/year | Compound lowest at $428.93/year
Example 2: ETH Lending for 6 Months
Problem: Lend 5 ETH for 180 days on Aave at 2.1% APY vs Compound at 1.8% APY.
Solution: Aave: 5 × (1 + 0.021/365)^180 - 5 = 0.05178 ETH\nCompound: 5 × (1 + 0.018/365)^180 - 5 = 0.04438 ETH\nDifference: 0.00740 ETH more on Aave\nDaily Aave earnings: 0.000288 ETH
Result: Aave: +0.0518 ETH | Compound: +0.0444 ETH over 6 months
Frequently Asked Questions
What is APY in DeFi lending?
APY stands for Annual Percentage Yield and represents the real rate of return earned on a deposit when compounding interest is taken into account. In DeFi lending, APY reflects the annualized return you earn by supplying your crypto assets to a lending protocol's liquidity pool. Unlike APR (Annual Percentage Rate), which only considers simple interest, APY includes the effect of compound interest — meaning your earned interest itself earns interest over time. DeFi APYs are highly variable because they depend on supply and demand dynamics within each protocol; when borrowing demand is high relative to available supply, lending rates increase, and vice versa.
How does Aave lending work?
Aave is a decentralized lending protocol where users deposit cryptocurrency into liquidity pools to earn interest. When you supply assets to Aave, you receive aTokens (like aETH or aUSDC) that represent your deposit plus accrued interest. These aTokens continuously increase in value as interest accumulates in real-time. Borrowers pay interest to borrow from these pools, and that interest is distributed to lenders proportionally. Aave supports variable and stable interest rates, flash loans, and rate switching. The protocol uses an algorithmic interest rate model that automatically adjusts rates based on pool utilization, ensuring competitive yields while maintaining sufficient liquidity for withdrawals.
Are DeFi lending rates safe and reliable?
DeFi lending carries several risk categories that traditional savings accounts do not. Smart contract risk means bugs in the protocol code could lead to loss of funds, though major protocols like Aave and Compound have undergone extensive audits. Market risk includes the possibility of liquidation if collateral values drop sharply. Regulatory risk is evolving as governments develop frameworks for DeFi. Rate volatility means yields fluctuate constantly — a 5% APY today might be 1% tomorrow. Despite these risks, leading protocols have maintained strong track records over years of operation and billions in total value locked, making them reasonably reliable for informed users who understand the risks involved.
How are DeFi lending rates determined?
DeFi lending rates are determined algorithmically based on the utilization ratio of each lending pool, which is the percentage of deposited assets currently being borrowed. When utilization is low (lots of supply, few borrowers), rates are low to incentivize borrowing. When utilization is high (most assets are borrowed), rates increase to attract more deposits and discourage additional borrowing. Each protocol uses its own interest rate model — for example, Aave uses a kinked rate curve that increases gradually up to an optimal utilization point, then rises sharply beyond that threshold. These models run entirely on-chain via smart contracts, adjusting every block without any human intervention.
What is APY vs APR in crypto yield?
APR is the simple annual rate without compounding. APY includes the effect of compounding. A 10% APR compounded daily equals roughly 10.52% APY. Always compare APY to APY for accurate yield comparisons.
How do I get the most accurate result?
Enter values as precisely as possible using the correct units for each field. Check that you have selected the right unit (e.g. kilograms vs pounds, meters vs feet) before calculating. Rounding inputs early can reduce output precision.