Alright, you deposited your money on an exchange and you start seeing all these abbreviations: APR, APY, PNL... and honestly, you don’t understand anything. You’re not alone, don’t worry. Let’s try to clarify things together so you can read the numbers like someone who knows what they’re doing, not like someone reading the stars.

Let’s start with the meaning of APR. APR stands for Annual Percentage Rate, and it’s basically the annual interest rate that tells you how much you will earn as a percentage on the amount you invested in one year. Let’s make an example: if the APR is 12%, it means that with $100 in one year, you will earn $12 in profit (not counting compound interest, for now). But be careful, APR is not a guarantee set in stone. When you talk about staking or farming, the rate can vary depending on demand, supply, and how much rewards are distributed.

Now, the concept of APR isn’t complete if you don’t understand the difference between APR and APY. APY is the Annual Percentage Yield, and it’s basically the APR plus the effect of compound interest. The difference? If your rewards are credited and automatically reinvested, your profit grows faster. Same APR of 12%? With monthly compounding, you reach about 12.68% APY. See the difference?

On an exchange platform, you can earn in various ways. There are reward tokens: you can stake, locking your token and receiving rewards in the same token, or do liquidity farming where you provide liquidity in a pool and earn from transaction fees plus bonus tokens. Then there are Savings, which can be flexible or locked, where the profit is credited to you daily or weekly.

Some exchanges also offer combined structures, like a vault that pools multiple programs together, allowing you to accumulate rewards from multiple sources. And then there’s Launchpool, where you simply receive new tokens by keeping your coins in a pool for a set period.

But there’s another important thing: PNL, which stands for Profit and Loss. This is your actual gain or loss. Here, you need to distinguish between two things: realized PNL, which is the result already recorded when you sold or closed the position, and unrealized PNL, which is the potential result if you closed the position now. A concrete example: you bought a token for $10, the price rose to $12. Your unrealized PNL is $2. If you sell at $12, then your realized PNL becomes $2 and the unrealized goes back to zero.

Rewards on an exchange are generally credited daily or weekly, depending on the product. There’s a detail, though: they are proportional to the participation time. If you didn’t start at the beginning of the period, you will receive proportionally less. And the good thing is that everything happens automatically on your balance, without you having to do anything, although you always have the option to reinvest.

A piece of advice I can give you: think of APR as your estimated sun on the horizon, the theoretical gain you’re expecting. PNL, on the other hand, is your current moment, what’s happening right now. You can earn not only from interest but also from the price variation of the asset. But remember one fundamental thing: APR is only useful when the coin’s price isn’t falling faster than the interest you’re accumulating. If the price crashes, even a high APR won’t save you.