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  1. Home
  2. /Glossary
  3. /Annualized Return
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Annualized Return

The average yearly return on an investment, calculated to account for compounding.

Definition

The average yearly return on an investment, calculated to account for compounding. A 10% return over 6 months is roughly a 21% annualized return, not 20%, because of compounding. DeFi protocols often show annualized returns (APR or APY) to let you compare opportunities with different time frames.

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Related Terms

Annual Percentage Yield (APY)

The real rate of return on an investment over a year, accounting for compound interest.

Compound Interest

Interest calculated on both the initial principal and accumulated interest from previous periods.

ROI (Return on Investment)

The percentage gain or loss on an investment relative to its cost.

Accumulation Phase

A period when smart money quietly buys up an asset before a major price move.

Arbitrage

Profiting from price differences of the same asset across different markets.

Ask Price

The lowest price a seller is willing to accept for an asset.

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