APR (Lending)
The annualized percentage rate of interest earned or paid in DeFi lending, excluding compounding.
What is APR (Lending)?
APR in DeFi lending represents the annual interest rate for supplying or borrowing digital assets, calculated without compounding. For example, a 5% APR on a $1,000 USDC deposit yields $50 annually. Borrow APRs, like 7% on Aave’s DAI loans, reflect borrowing costs. Rates vary with utilization, often displayed transparently on protocol dashboards.
In 2025, APRs for stablecoin lending range from 3–6%, while volatile assets like ETH can hit 10% during high demand, per DefiLlama. Unlike APY, APR doesn’t account for reinvested earnings, making it a simpler metric for short-term comparisons.
Related Terms
mBridge
A multi-CBDC platform for cross-border payments using blockchain.
Constant Product Market Maker (CPMM)
An automated pricing model in DeFi that maintains a constant product of asset reserves in a liquidity pool to determine prices.
Consumer Price Index (CPI)
A monthly measure of average price changes in a fixed basket of goods and services purchased by urban consumers, produced by the Bureau of Labor Statistics.
Active Management Burden
The ongoing requirement for liquidity providers to monitor and adjust positions in DeFi to optimize returns and mitigate risks.
Gas Price
The amount of Ether (ETH) a user is willing to pay per unit of gas for a transaction on Ethereum.
Ethereum Lightweight Client
An Ethereum client that operates without storing the full blockchain or validating blocks and transactions, functioning primarily as a wallet for creating and broadcasting transactions.