ROI vs APR: Di Difference Wey Fit Change Your Numbers

Two words. One letter different. Massive difference for meaning. When you dey check any yield product — especially for DeFi — to sabi di difference between APR and ROI na di most important thing after you don understand di protocol itself.

APR (Annual Percentage Rate)

Na di simple interest rate, no dey consider compounding. If you dey earn 1% per day for 365 days without compounding, your APR na 365%.

APR dey assume say no reinvestment of yield.

ROI (Return on Investment)

Na di effective return over a specific period. Turbo Loop dey offer fixed ROI plans: Power Loop wey dey give 3% daily for 10 days (30% total) and Ultimate Loop wey dey give 10% daily for 10 days (100% total). Dis no be annualized rates but fixed returns over di plan duration.

Di practical difference

For 10% APR, here be di ROIs for different compounding frequencies:

No compounding: 10%
Monthly: 10.47%
Weekly: 10.51%
Daily: 10.52%
Continuous: 10.52%

For 100% APR:

No compounding: 100%
Monthly: 161%
Weekly: 169%
Daily: 171%
Continuous: 171%

Di higher di rate, di bigger di APR-to-ROI gap. For high APRs, compounding dey make serious difference.

Turbo Loop's numbers

When you see