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Annual percentage yield

Introduction

Annual percentage yield (APY) on Euler refers to the annualised return earned on deposits or the interest paid on borrowed assets, accounting for compound interest. It represents the effective yield a user earns when supplying assets to the protocol or the cost of borrowing when taking loans.

Supply APY​

Supply APY is the yield earned on an asset deposited into Euler. While yield primarily comes from lending to borrowers, deposits may also receive additional sources of yield, such as staking rewards or protocol incentives. The Supply APY displayed in the user interface consists of:

  • Lending APY – Yield earned from lending assets to borrowers.
  • Intrinsic APY – Yield inherent to the supplied asset (e.g., staking rewards from Lido's stETH). This yield compounds with lending interest every block.
  • Rewards APY – Yield from token incentives, such as reward EUL (rEUL). This does not compound with lending yield.

Borrow APY​

Borrow APY represents the cost of borrowing on Euler, reflecting the interest paid by borrowers to lenders. It is typically higher than the Supply APY because:

  1. Not all assets are lent out (utilisation is designed to remain below 100%).
  2. A small fee is taken from the interest paid by borrowers.

Like the Supply APY, the Borrow APY has multiple components:

  • Borrowing APY – The interest paid to lenders.
  • Intrinsic APY – Yield inherent to the borrowed asset, which must also be repaid. This compounds with borrowing costs every block.
  • Rewards APY – Yield from token incentives, such as reward EUL (rEUL). This can reduce borrowing costs or even make borrowing profitable in some cases. Rewards APY does not compound with borrowing yield.