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Annual Percentage Rate (APR)

The amount of interest a borrower must pay each year is known as the annual percentage rate (APR). The annual percentage rate (APR) is determined by multiplying the periodic interest rate by the number of periods in a year that the periodic rate is used.

What Is An Annual Percentage Rate (APR)?

The monetary value or reward that investors may earn by making their crypto tokens accessible for loans, taking into consideration the interest rates and any other fees that borrowers must pay, is referred to as the annual percentage rate (APR). Customers are encouraged by multiple platforms to stake their crypto assets by offering them a high annual percentage rate (APR). APR is exclusive of compounding interest. 


Some cryptocurrency exchanges do not allow you to lend out your coin. However, those exchanges that do, offer different rates. These interest rates fluctuate significantly based on the sort of loan or currency you lend out.


Fixed and flexible loans are the two major types of loans offered by exchanges.


  • Fixed lending is similar to a bank CD. It secures your money for a defined length of time, usually seven to ninety days, at a fixed rate. The benefit of not touching your cryptocurrency is that it pays a greater rate of interest.


  • Flexible lending works in a similar way to a savings account. However, in this case, you have the option of withdrawing your cryptocurrency at any moment. The rates of return offered by this type of lending are lower.


Binance, the world's largest cryptocurrency exchange by volume, provides a variety of investment options through Binance Earn, including both fixed and flexible financing. 


Investors must keep in mind that Bitcoin and other cryptocurrencies are extremely volatile. As a result, the amount of interest you earn may be variable. Crypto lending programs are appealing for those investors who want to keep their coins for a long term, hence passive income will add value to their portfolio. However, any changes in the price of the cryptocurrency would have an impact on their revenue. Investors who take part in fixed loan programs can expect fluctuations in the value of their portfolio since they will not be able to exchange coins that are locked up for a specific length of time.

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Annual Percentage Rate (APR)

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