> For the complete documentation index, see [llms.txt](https://sparklexai.gitbook.io/docs/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://sparklexai.gitbook.io/docs/fundamentals/apy-and-compounding.md). # APY & Compounding **APR (Annual Percentage Rate)** is a straight-line number: what you'd earn over a year if you never reinvested rewards. It's fine for quoting loan costs, but it leaves a lot of DeFi growth off the table.\ \ **APY (Annual Percentage Yield)** shows what happens when every payout—interest, trading fees, staking rewards, incentive tokens—is added back into your position so the next round earns on a slightly larger base. That snowball effect is compounding.\ \ DeFi pays on many clocks: interest can accrue block by block, pool fees arrive with each trade, staking rewards show up by epoch, incentives may drip or vest. When income lands this often, compounding matters. Tha's why APY is the number that tells the real story.\ \ SparkleX reports **APY by default** and automatically rolls rewards back in as soon as it's profitable to do so (gas-aware). The result: more of each drip ends up in the river—and in your wallet. --- # Agent Instructions This documentation is published with GitBook. GitBook is the documentation platform designed so that both humans and AI agents can read, navigate, and reason over technical content effectively. Learn more at gitbook.com. ## Querying This Documentation If you need additional information that is not directly available in this page, you can query the documentation dynamically by asking a question. Perform an HTTP GET request on the current page URL with the `ask` query parameter, and the optional `goal` query parameter: ``` GET https://sparklexai.gitbook.io/docs/fundamentals/apy-and-compounding.md?ask=&goal= ``` `ask` is the immediate question: it should be specific, self-contained, and written in natural language. `goal` is optional and describes the broader end goal you are ultimately trying to accomplish on behalf of the user. GitBook uses it to tailor the answer towards what is most useful for that goal. The response will contain a direct answer to the question and relevant excerpts and sources from the documentation. Use this mechanism when the answer is not explicitly present in the current page, you need clarification or additional context, or you want to retrieve related documentation sections.