Definition
Yield describes income from sources such as lending interest, trading fees or distributed rewards. It is often presented as a percentage, but the meaning depends on the measurement period and calculation method. An annualized rate is a projection or conversion of a rate, not proof that the same income will continue for a full year.
How It Is Measured
APR commonly expresses a simple annualized rate, while APY incorporates a stated compounding assumption. Returns may be paid in the deposited asset or another token. Fees, reinvestment costs and changing rates affect the amount actually received. Token rewards can also change in market value between accrual and sale.
Key Considerations
Yield is not the same as total return. Price declines, impermanent loss, defaults or other losses can outweigh income. A high displayed rate may depend on temporary subsidies or substantial risk. Identify who pays the yield, why it exists, how long incentives last and whether principal is exposed. Comparing rates without matching assets, periods and compounding assumptions can be misleading.