UFO Gaming is a community-owned, decentralized play-to-earn (P2E) gaming platform that aims to bridge traditional gaming onto the blockchain.

Long before Facebook rebranded to Meta and popularized the concept of the 

After years of building and development, the visionary team at UFO Gaming finally gave the world access to its Dark Metaverse through a much-hyped launch party held in late July 2022.

But with so many metaverse-themed projects mushrooming around the crypto space, what sets UFO Gaming apart? Is it the next eSports giant?

Let’s immerse ourselves in the Dark Metaverse and find out.

 (P2E) gaming platform on a mission to build a bridge from traditional gaming to blockchain.

 to unlock the infinite possibilities of the virtual world.

 governance structure ensures that the project is fully decentralized and focused on empowering its community.

Powered by its utility token, UFO, this next-level gaming project has created an ecosystem that incentivizes you to earn while playing. It has a staking 

 that lets you stake and mint, and earn rewards. You can also own virtual land and other valuable digital assets through 

Apart from the creation of a Dark Metaverse, UFO is keen on making its mark on the multi-billion-dollar eSports industry through tournaments, streaming and sponsorships.

UFO’s primary focus is on blockchain-based gaming. Its gaming platform is 100% owned by its community. The development team is keen on building a user-friendly system for everyone. 

The facets that make up the UFO ecosystem consist of the following.

A core component of UFO’s operations is its immersive, imaginary planet known as the Dark Metaverse. In this metaverse-themed, infinite ecosystem, you’ll find play-to-earn (P2E) games with breedable in-game NFTs, virtual land and a metaverse launchpad. 

, meaning that the games on its platform aren’t confined to Ethereum’s network; they can be built on other blockchains as well. The Dark Metaverse also operates using sub-economies that consist of virtual areas which you can own. Virtual land on the Dark Metaverse is in the form of ERC-721 tokens (NFTs), which can be minted or purchased using UFO tokens. 

The largest landowners in the Dark Metaverse are known as "Eternals." They’re considered to be profitable for the entire metaverse, and they have influential DAO rights. 

New planets will continuously be added to this metaverse, which will signify a new game is following right behind. Once you inhabit a planet on the Dark Metaverse, you’ll have access to new game launch sales and grow your revenue as the game rolls out. 

The Dark Metaverse will also feature an NFT marketplace, and collaborate with 

 to launch an in-house, cross-chain DEX. Once the DEX is launched, there will be more ways to monetize UFO Gaming assets through cross-chain swaps, staking and NFT staking.

Super Galactic — UFO Gaming's First Metaverse Game

The first game to launch on UFO Gaming’s Dark Metaverse is 

 is an arcade action game (ARG). You can breed digital soldiers (in the form of NFTs), and use them in battles to earn rewards. 

, which ensures minimal gas fees. It has a next-level gaming interface with finite in-house NFTs known as UFOeps. They’re the playable characters needed to participate in 

 uses a three-token system consisting of UFO, Plasma Points and UAP tokens. To start playing the game, you’ll need to stake UFO on 

With your staked tokens you’ll earn Plasma Points, which you can use to buy the UFOeps needed to play the game. 

You can also breed your own soldiers, which requires UAP tokens. These tokens are obtained by participating in daily quests and completing missions. While UFO and UAP tokens are tradable, Plasma Points are only for minting UFOep NFTs. 

Apart from P2E NFT games, UFO Gaming is also targeting the larger gaming industry through eSports, streaming and tournaments.

The project has partnered with established streamers to host tournaments with enticing prize pools. For example, UFO Gaming held an 

 in which gamers competed for a $10K prize. Furthermore, UFO Gaming has collaborated with Horizon to 

Decentralized Autonomous Organization (DAO)

UFO Gaming is community-governed and operates as a 

 (DAO). To vote on proposals, you need to hold UFO tokens which give you an equal right on the success of the project. 

 standard, and acts as the primary token of the UFO Gaming platform. It’s used for staking to generate Plasma Points, with which you can purchase playable characters for gaming. 

UFO tokens are also used to provide liquidity on 

 by locking them in the UFO-ETH liquidity pool, where you’ll receive a share of the fees generated.

, The Cosmos, that lets you stake UFO or UFO-ETH LP tokens to earn Plasma Points and extra UFO tokens using a dual-reward system. All UFO rewards have a vesting period of 12 months (meaning you can only claim them after one year). 

, you can choose to single-stake UFO tokens, which earn you 25% of the pool, or LP stake UFO-ETH LP tokens which attract 75% of the Plasma Points pool. 

In addition, you can opt for locked or flexible staking. Flexible staking allows you to remove your tokens at any time. On the hand, locked tokens are staked for 1–52 weeks and attract more rewards. The longer the tokens are locked, the higher the rewards.

Note that while the tokens are Ethereum-based, the staking is done on the Polygon Network. This means that you need to bridge your tokens from Ethereum to Polygon before you can start staking.

All of the UFO tokens are 100% community-owned. Fifty percent of the total supply of 51,515,151,515,515 tokens were added to Uniswap, while the remaining 50% were permanently burned. The current circulating supply is at around 25,757 trillion tokens, which also represents the total remaining supply. Its current price is $0.000002122 ( as of Sept. 20, 2022).

Since the launch of The Cosmos, UFO Gaming’s staking DApp, UFO rewards for stakers will be emitted over a period of 12 months. However, the distribution won’t have an inflationary effect, since all of the remaining UFO tokens are already in circulation. The tokens for rewarding stakers have been provided by the project partners and team. 

(MANA) have disrupted traditional gaming. The futuristic concept of a metaverse has been received positively, especially by the gaming world, and is expected to grow significantly in the next few years. 

That said, UFO Gaming has been built by a team of gaming lovers, each of whom has been in the crypto industry for over six years. Its combination of community ownership and a metaverse realm that has NFTs, virtual land, a launchpad and highly-accessible games makes UFO Gaming a strong project. 

Upon launch in July 2021, the UFO price was relatively static However, the price started to rise steadily in the months that followed, reaching its highest price of $0.00005569 at the end of November 2021 during the crypto bull run.

After that, the price began to decline steadily, finding support around the $0.000002 range. The UFO price has been trading sideways since March 2022, though it experienced a slight price spike in August 2022. 

Experts have mixed sentiments about the future price of UFO tokens. WalletInvestor is bearish, forecasting 

 for UFO. According to their technical analysis, the highest that the price could go by 2025 is $0.000005595. 

 that UFO could reach a maximum level of $$0.00000910 in 2025, and break its all-time high in 2030 by hitting $0.00005630. 

However, let’s look at the UFO price prediction from a cautiously optimistic angle. UFO has been categorized as a metaverse token. Unlike most of the tokens in this category, UFO may be the only one still below $1.

Considering that the UFO token is still a low market-cap coin, there’s room for a significant price increase. Therefore, UFO’s price is one to watch as the project launches new games and opens up its network for developers to integrate their games on the platform. 

Remember, cryptocurrency prices are prone to extreme volatility. Always do your own research and your due diligence before investing in any token. 

The team at UFO Gaming is on an ambitious mission to create a gaming platform that’s built for the real world. By leveraging blockchain technology, the project continues to open up the infinite possibilities of the metaverse to gaming enthusiasts.

Based on the superior architecture of the 

 game, UFO Gaming’s Dark Metaverse seems to have caught the gaming community’s attention. As more games launch on its platform and the team continues to make a mark on the eSports industry, UFO Gaming could be another metaverse project headed for a breakout. 

Intermediate

ufo-gaming-crypto.jpg

UFO Gaming Crypto: Into the Dark Metaverse

Compound Finance (COMP) is an Ethereum-based lending and borrowing protocol that algorithmically sets interest rates based on the activity in its liquidity pools.

 (DeFi) industry has brought us many innovative crypto solutions to put our assets to use. By expanding on the concept of traditional finance lending services, new lending and borrowing protocols are readily being adopted by crypto enthusiasts and flourishing in the world of DeFi in the last few years. Among the leading 

 (DApps) in this domain is Compound Finance (COMP), a lending and borrowing protocol that celebrated its fourth birthday this month (September 2022). 

lending and borrowing protocol that algorithmically sets interest rates based on the activity in its liquidity pools. As of the time of writing (Sept. 15, 2022), the 

 (TVL) in Compound’s smart contracts stands at over $2 billion.

As a Compound user, you can lend and borrow some of the most popular cryptocurrencies instantly without having to go through a traditional financial intermediary. It’s one of the largest and oldest lending and borrowing apps in the crypto world.

Compound is used extensively by DeFi developers, who programmatically integrate it into their DApps and use the protocol for dynamic borrowing and lending. Many yield aggregation protocols and other DeFi apps make use of Compound.

The protocol is also widely used by the general crypto public, not just developers. Non-technical users can borrow funds from Compound by supplying a different crypto coin as collateral.

Compound has been funded by several notable venture capital firms, including Andreessen Horowitz, Bain Capital Ventures and Polychain. The protocol was launched in September 2018 by San Francisco-based Compound Labs, at a time when the lending and borrowing landscape of the crypto industry was still in its early stages of development. Its current main version, V2, was launched in May 2019.

The protocol’s second version introduced several important upgrades, including cTokens, synthetic assets that lie at the heart of Compound’s current supply and borrow functions.

In August 2022, Compound launched V3, which works in parallel with V2. The third version focuses on a higher degree of simplicity in using the app and offers fewer cryptocurrencies, compared to V2.

At the moment, the bulk of activity on the protocol still takes place on V2, with V3 likely to gain wider use in the future.

Compound dynamically maintains the interest rates in its coin pools, based on the supply and demand for the particular cryptocurrency. Coin prices are fed into the protocol using 

 that source crypto price data from various exchanges. 

Since supply and demand fluctuate, the interest rate for each crypto varies according to the liquidity in the market. You can check the current interest rate for the crypto you wish to lend or borrow on each 

If you’re a DeFi developer, you can use functions provided by Compound to integrate the protocol into the working mechanism of your DApp.

If you’re an individual looking to lend or borrow crypto, you can easily interact with Compound via its graphical user interface and one of the supported Compound wallet brands. The following wallets are directly integrated by the Compound app:

Once you’ve linked your wallet to the Compound app, you’re ready to start using the protocol.

The first major operation you’ll need to carry out on Compound is to lend some crypto funds to the protocol. This is necessary so that you have the ability to borrow. Similar to other popular lending and borrowing platforms, Compound requires collateral to let you borrow from the protocol. The supplied collateral will earn interest within the protocol, though you won’t be able to redeem the collateral while you’re borrowing.

In the platform’s parlance, lending to the protocol is called “supplying.” If you use Compound’s V2, the most commonly used version as of today, you have a choice of around 20 different cryptocurrencies you can supply.

Typically, the most actively used pools both for supplying and borrowing are based on Ether (ETH) and on popular 

he top 5 cryptocurrencies by supply amounts on Compound V2 as of September 15, 2022

If you use V3, your choice of cryptos to supply will be more limited. At the moment, Compound’s V3 offers five coins as shown below.

The supply cryptocurrencies on Compound V3 as of September 15, 2022

When you supply your crypto to Compound, you’re issued special 

. For each cryptocurrency lent to the protocol, there’s a corresponding cToken.

For example, if you lend in Dai, you’ll be issued cDai tokens. If you lend in ETH, the corresponding cToken issued to you will be cETH, and so on.

Critical to the entire Compound functionality, cTokens serve several key purposes on the platform beyond simply confirming your deposit. We’ll take a closer look at them later in this article.

Lending a coin to Compound allows you to earn interest from your investment, as well as establishing your eligibility to borrow a different cryptocurrency from the protocol.

As soon as you’ve lent some funds to the Compound protocol, you’ll have an estimated borrowing capacity. Based on this, you can borrow crypto up to a certain limit from Compound. Your borrowing capacity is estimated in USD equivalent.

For instance, if you’ve lent 100 Dai to the protocol, your borrowing capacity will be estimated based on the rate of the Dai coin determined by the Open Price Feed system.

If you’ve lent funds to the protocol in multiple cryptocurrencies, they’ll all be taken into account in order to determine your total borrowing capacity.

You may borrow crypto funds from the protocol based on the collateral ratio of each coin. For example, if Wrapped Bitcoin (WBTC) has a collateral ratio of 80%, you can borrow in WBTC up to 80% of your total lent amount. Most coins have a collateral factor somewhere between 60% and 85%.

As such, Compound is a typical over-collateralized borrowing system. This carefully maintained over-collateralization allows the platform to maintain its time-tested (at least by the standards of the young DeFi industry) stability and robustness.

When you borrow from Compound, you’re issued funds in cTokens, the same tokens used for lending. Thus, using our WBTC example above, when you choose to borrow in this coin, the funds are actually released to you in cWBTC tokens. You’ll also pay interest based on your cToken liability.

Once you’ve closed your debts to the protocol, you may redeem the funds you lent to Compound at any time. The beauty of lending and borrowing on Compound is that you don’t have to deal with another trader — and there are no minimum investment periods or withdrawal penalties. At all times, you’re transacting with a dynamically maintained set of liquidity pools.

When you redeem your investment, your cTokens, along with the accumulated interest added to them, are converted back to the original cryptocurrency you lent to the protocol.

Compound uses the concept of account health to determine accounts on the platform that are at risk of liquidation. Account health is the ratio of the sum of your supplied funds in an account equivalent to the total amount borrowed.

If your account health ratio falls dangerously low, your account may be liquidated and you’ll lose some of your collateral. Compound doesn’t use a centralized system to liquidate accounts.

The entire procedure for monitoring for risky accounts, and any liquidation itself, are carried out in a decentralized way by platform users who act as liquidators. They then receive a portion of the liquidated account’s funds.

cTokens are a fundamental tool on the Compound platform. When you supply funds, you’re issued these tokens, which act first and foremost as your “deposit certificate.”

All the interest that accrues on your lent funds is added to your cTokens holdings, not to the original crypto coin you’ve invested. As such, these tokens are synthetic assets whose value grows over time.

When you borrow funds, the amount is dispatched to you in the corresponding cTokens as well. Given the nature of these tokens, they have limited-to-no use in the general crypto market outside of the Compound platform.

The COMP token is Compound’s main and native cryptocurrency. An ERC-20 standard token, COMP’s main function is 

. COMP holders have the right either to vote or delegate votes on all key changes concerning the protocol. COMP is currently the ninth largest governance crypto by market cap.

The top 10 governance cryptocurrencies by market cap as of September 15, 2022

Compound Crypto Price Prediction: Is COMP a Good Investment?

The COMP token was launched in June 2020, initially trading slightly below the $100 level. Less than a year after its launch, in May 2021, COMP soared to its all-time-high price of $910.54. As the overall crypto market cooled around mid-2021, the COMP token entered a prolonged period of decline.

That decline ended in mid-June 2022, with COMP touching a low of $26.41. Since then, the token has been on a path of slow and steady recovery. It currently trades at around $57 (as of Sept. 15, 2022).

In general, COMP’s price movements have largely followed the overall crypto market, a common scenario for the majority of leading and established 

As the crypto market is in the slow recovery phase, COMP should also be trending modestly up in the short- and medium-term future. Over the long term, we expect COMP to perform well, perhaps better than most other altcoins.

Compound’s business fundamentals are strong, and the platform has proven its viability over the last four years. Some investors and analysts even consider COMP to be among the ultimate 

 coins. CoinCodex expects Compound’s price to rise a maximum of 

, an over 1,000% increase from its current price. DigitalCoinPrice also anticipates a rise, though less dramatic than that forecasted by CoinCodex, to a maximum of about 

Since COMP is one of the most well-established altcoins, there’s no shortage of exchanges where you can buy it. Bybit offers COMP on both its 

Compound is among the leading DeFi platforms, and is likely to remain so for the foreseeable future. The protocol’s time-tested business concept, ample over-collateralization, solid market results and ubiquitous brand awareness among DeFi traders all contribute to its ongoing success. Those who consider COMP a HODL token might just be spot-on in their assessment.

what-is-compound-crypto.jpg

What Is Compound Crypto Protocol?

Liquidity provider (LP) tokens ) are tokens automatically generated by a DEX and issued to a liquidity provider once they contribute assets to a liquidity pool.

You might have heard the buzzwords ‘’yield farming‘’ or “staking for yield.’’ Indeed, they’re popular terms used in the 

e (DeFi) ecosystem, which birthed the concept of 

(AMMs). These protocols rely on liquidity providers to contribute their assets into a pool to facilitate transactions. Once you become a liquidity provider, you’re issued liquidity provider (LP) tokens.

What are LP tokens? What role do they play in DeFi? Are they risky?

Liquidity provider (LP) tokens (at times called liquidity pool tokens) are tokens automatically generated by a DEX and issued to a liquidity provider once they contribute assets to a liquidity pool.

 These tokens represent one’s share of the fees earned by the liquidity pool.

A simple formula to calculate the value of a liquidity provider token is as shown:

Total Value of Liquidity Pool / Circulating Supply of LP Tokens = Value of LP Token

LP tokens give you full custody of your locked assets. Most DEXs allow you to withdraw them at any time and redeem the interest earned.

Technically, LP tokens are pretty much the same as other tokens supported by a blockchain network. For example, an LP token issued on Uniswap, which runs on the 

. With an ERC-20 token, you can stake, swap or trade Uniswap LP tokens on any Ethereum-based protocol.

Depending on the DeFi platform, LP tokens may be called by different terms, but they usually contain the names of the two crypto trading pairs they represent. 

, the LP tokens are known as Balancer Pool Tokens (BPT). On 

, they’re called Sushiswap Liquidity Provider (SLP) tokens. If you’re providing liquidity on SushiSwap for people to swap between ETH and 

, your LP tokens will be USDC/ETH SLP tokens.

LP tokens are essential to the smooth operation of a DEX, and are pivotal to the automated market maker (AMM) used by these platforms.

Without them, it would be difficult to track your contribution to the liquidity pool. LP tokens determine your share of fees generated from the transactions on the pool.

Besides unlocking liquidity on DEXs, LP tokens have other uses. For example, you can use them to participate in 

 (IDOs), as collateral for crypto loans or stake them for more rewards through yield farming. 

In crypto, token prices are determined through 

 rely on market makers, takers and order books to execute trades. However, control over these platforms remains in the hands of a central authority who may maliciously manipulate prices.

However, DeFi has provided an alternative approach to trading through DEXs that use such AMMs as 

 rather than people controlling the order book.

AMMs use LP tokens to remain noncustodial. By not taking ownership of your LP tokens, they promote transparency and fairness. You own the LP tokens and can use them to trade tokens across the DeFi ecosystem and withdraw liquidity without interference.

refers to the ability to quickly trade an asset without causing a significant change in its price. Currently, 

 is the most liquid asset in the crypto market since you can trade it on many exchanges without impacting its price.

However, the DeFi space typically has low liquidity since some tokens are available on only one exchange. At times, it’s challenging to find someone who wishes to trade a particular token. Moreover, tokens that are locked through 

 in proof of stake (PoS) blockchains such as 

 cannot be used for other purposes, which further removes liquidity from the DeFi ecosystem. The solution to the problem of locked liquidity is to use liquidity pools (or liquidity mining) to facilitate trades.

Through AMMs, LP tokens solve the problem of limited crypto liquidity as they function as proof of ownership of your staked tokens and can be used in numerous ways.

Once you provide a pair of crypto assets to a liquidity pool, the DEX automatically issues you LP tokens in proportion to the amount you deposited. For example, if you deposit assets worth $100 into a liquidity pool whose value is $1,000, you’ll be issued 10 percent of the LP tokens in that pool.

The amount of LP tokens you own represents your value in that pool and will be used to claim any interest earned from transactions. They’ll reflect on your crypto wallet, and you can freely move them around to different 

 to maximize your profits. When you withdraw LP tokens, you lose your share of the liquidity pool.

You can only acquire LP tokens if you’re a liquidity provider. To become one, you need to lock up your crypto assets on DeFi DApps such as Uniswap, 

However, centralized exchanges now offer liquidity provision through 

, allowing users to provide liquidity to different pools and earn rewards. In this case, you won’t receive LP tokens since custody lies with the centralized exchange.

The main reason for having liquidity provider tokens is to earn passive income from the fees generated by a liquidity pool. However, you can also use them for different purposes across the DeFi network.

There are two ways to maximize your profits with 

. You can either manually move your tokens across different DeFi protocols, or you can deposit your LP tokens into the liquidity pools of various protocols such as 

, which help you earn compounded interest. 

To manually move your tokens, start by depositing a crypto token pair into a liquidity pool on a DeFi protocol, then deposit the LP token you receive in another protocol. You’ll earn twice from your liquidity provider token — as a liquidity provider and by farming yields. 

You can use LP tokens as collateral to secure a crypto loan. 

, in which lenders receive interest from borrowers, has become a popular DeFi product.

For example, you can use your LP tokens on Aave as collateral for a loan. You can also use them to borrow DAI, ETH, 

An initial DEX offering (IDO) is a crypto token offering held on a DEX. LP token holders on a particular DEX can participate in the IDO of that DEX to invest in a new cryptocurrency project.

As with other crypto assets, owning LP tokens isn’t without risk. Here are some of the common risks associated with LP tokens.

Once you opt to lock your tokens into a crypto liquidity pool, you may miss out on other opportunities in the crypto market. For example, instead of providing liquidity to earn LP tokens, your funds might be better off in more lucrative crypto investments.

Perhaps the most inherent risk of owning LP tokens is

. By providing liquidity, you may suffer from inherent loss when the value of the amount you’ve deposited is greater than the value you withdraw upon exiting the pool. Impermanent loss occurs due to price changes over time.

Usually, liquidity pools that contain volatile trading pairs are more prone to impermanent loss. To reduce the risk of impermanent loss, you can opt for stablecoin pairs, which often have a smaller price range.

One of the ways some DeFi protocols cushion LP token holders from impermanent loss is by charging substantial fees for transactions. For example, liquidity providers on Uniswap receive a share of 0.3% fees charged on trades. As such, despite the exposure to impermanent loss, you’re compensated by generous transaction fees.

Liquidity pools are governed by using smart contracts. When you stake LP tokens into a DeFi protocol, you’re trusting the strength of the network’s smart contract. However, 

In the past, smart contracts have been exploited, leading to loss of funds. If your LP tokens are locked in a smart contract that fails, you could lose them and the liquidity that you’ve provided.

That said, most platforms have instituted security measures, such as 

, to keep their smart contracts safe from hackers.

Similar to other tokens, you could lose your LP tokens permanently if you can’t access your 

. Thieves could also gain access to your crypto wallet and steal the tokens.

It’s always wise to keep your private keys safe in a 

LP tokens play a critical role in DeFi. Not only do they help determine your share of the liquidity pool, but they can also be used for yield farming, as collateral and to transfer value. Despite the risks associated with LP tokens, they’re an enticing way to earn passive income from your crypto assets.

All told, the DeFi space is constantly evolving, therefore, use cases for LP tokens are continuously being developed. As an LP token holder, diversifying your portfolio shouldn’t be an afterthought. You can work around your risk tolerance to determine how best to reap maximum returns on your LP tokens.

liquidity-provider-lp-tokens.jpg

What Are Liquidity Provider (LP) Tokens – And How Do They Work?

APR and APY are two different ways of calculating interest rates. Read on to find out their difference and how it affects your crypto investments.

APR (annual percentage rate) and APY (annual percentage yield) are key concepts used in the calculation of interest from a variety of crypto investments or loans. The investments may include the provision of funds to liquidity pools on exchanges, 

Some of these investments may pay you interest based on the APR rate, while others use the APY method of calculating the payout. For any crypto investor, it’s imperative to know the difference between APR and APY to allocate your funds to the most profitable income sources.

Many people are familiar with the interest rate paid on savings accounts or charged for loans by traditional financial institutions. When you’re quoted a 5 percent annual interest rate, your investment of $100, for example, will generate $5 in profit exactly one year from the time you invest. Alternatively, if you borrow $100 at the same interest rate, you’ll have to pay back your borrowed amount plus $5 in interest after one year.

This simple interest rate calculation is based on APR. 

APR, or annual percentage rate, whether in traditional banking or the crypto world, refers to the ordinary interest applied to the principal amount of an investment or loan. 

It doesn’t take into account the concept of compounding interest, which we’ll discuss in this article.

APR is an annualized figure. If an investment or loan is held for less than a year, the interest applies on a pro-rata basis. For example, a half-year investment with an APR of 5 percent will earn you exactly half the interest, 2.5 percent, on your principal amount.

(DeFi) platform to earn some interest, and the interest rate in APR is 24 percent. If you lock your funds in the pool for exactly 365 days, your total investment will grow to 1.24 Ether. This includes your principal of 1.0 Ether and the 0.24 Ether (based on the 24 percent APR) that accrued as interest.

APR is a pretty straightforward interest rate concept. Below is the basic formula for calculating a total final amount based on APR:

 — principal, i.e., the initial investment or loan amount

Using our 1.0 Ether investment, the figures in the formula are:

This assumes an investment period of exactly one year. If you hold the investment for a three-month period, i.e., one quarter (0.25) of a year, then the formula yields:

1.0 Ether [1 + (0.24 × 0.25)] = 1.06 Ether

, is a measure of interest applicable to an investment or loan that takes into account 

The interest can be compounded at any set period — either continuously, daily, weekly, monthly or annually. The inclusion of compounding interest makes calculating APY more complex, as it takes into account the number of periods at which the amount is adjusted based on the interest rate.

The formula for the final amount based on APY is as follows:

The important part of the formula is the N value — the number of compounding periods. It’s what makes APY and APR different. The number of compounding periods is the number of times the investment amount is recalculated based on the quoted nominal interest rate.

During each recalculation, the interest is added to an amount that includes the initial investment plus all the previously accrued interest earnings. 

Let’s imagine you invest 1.0 Ether for one year at the APY rate of 24 percent, and your investment has two recalculation periods: At 6 months and 12 months. In this scenario, the figures in the APY formula are:

[1.0 Ether × (1 + 0.24/2)2] = 1.2544 Ether

Compound interest, due to the periodic recalculations, increases the total final amount compared to using the simple APR-based interest. 

Hence, the same initial investment (1.0 Ether) over the same period (1 year) with the same quoted interest rate (24 percent) produces the final payouts of 1.24 Ether using APR and 1.2544 Ether using APY. As you see, with compounding interest, your APY interest is magnified over time as compared to APR interest.

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