A displayed annual rate is an assumption-based projection, not a completed year of earnings.
Identify the payer
A yield display can combine borrower interest, swap fees and incentive tokens. These are economically different sources. Aave describes interest earned on supplied assets, while Uniswap documents fee arrangements for trading. An incentive paid in a project token may change value sharply. Before comparing rates, ask which activity funds each component and whether the displayed figure includes temporary incentives.
APR versus compounding
For a fictional investment earning a constant 12% nominal annual rate compounded monthly, the mathematical annual yield is (1 + 0.12/12)^12 − 1, approximately 12.68%. That assumes reinvestment at the same rate with no costs. It is not a forecast. If reinvestment costs money or the rate varies, the actual result differs from the calculation even before asset-price changes.
Separate units from currency value
Receiving more token units does not necessarily increase the position’s value in your chosen currency. A complete record tracks starting assets, additional units, costs and end prices. A promotional rate that measures rewards in one asset while showing principal in another should make its conversion assumptions explicit. Otherwise readers may compare figures that describe fundamentally different exposures.
A usable comparison sheet
List the earning mechanism, rate observation period, compounding assumption, withdrawal conditions, incentive end date and all fees. Use realised results for historical claims and label projections as projections. Do not present a brief spike extrapolated over a year as an achieved return. This turns yield comparison into a source-and-cost exercise rather than a competition to find the largest percentage displayed on a screen.
Sources & further reading
Sources checked 7 October 2026. Source-linked explanatory content; not personalised investment advice. Found an error? Request a correction.
