Why to care about APR ?

in LeoFinance4 days ago (edited)

flourdust1910046_1280.jpg

I've noticed so many investors caring so much about APR - Annual Percentage Rate. While I don't notice a lot of talking about MPR - Monthly Percentage Rate or DPR - Daily Percentage Rate.

frame1868498_1280.jpg

I understand that the long term is the best thing to consider in this situation, but could we apply this to crypto as well ? Especially knowing how the price is not that stable, and it can be pumped and dumped. I think trading in this case could be more profitable than just holding.

frame1868498_1280.jpg

Let's suppose that we have a high APR of a coin we hold. But the price of this coin may go much lower than that. So, we will have a lot of coins with high APR, but much lower price. In this case we are losing for holding but not winning anything. That's in the case if it's not a stable coin.

frame1868498_1280.jpg

APR could be beneficial only in the case of stable coin. That's why investors are so excited when they see a high APR for a stable coin. In the case of the coin or the token we earn from curation, it's clear that the APR is not always beneficial in case it's not a stable coin.

pobs.png

So, generally talking about APR for any cryptocurrency is not right in my opinion.

APR is good to care about only with a stable coin !


picture source

Posted Using LeoFinance Beta

Sort:  

It makes some sense for a coin that you think has good fundamentals and may rise in the future. The interest lowers your cost basis. So, when the price does what you think it will do, the difference will be large. Of course, things can just as easily go in the way you suggest.

I'll point out the CRO token. I'm earning 10% from staking and 6% in Earn. The fundamentals are there for CRO to do well in future. But, like most cryptos, it has been hammered. While I have been earning interest, I am down overall. But, I'm comfortable because I know that it has the potential for long-term win.

I understand you, but the potential is not always positive. I've seen so many good projects gowing down in price during years. Unless some magic happen and big investors join them after years, like what happen to doge.

Most APR’s are based on the issuance of the tokens not on their dollar worth. I think that’s what most people fail to take into consideration

Posted Using LeoFinance Beta

Maybe that's the problem. That's what surprise me the most as well. A year in crypto is like a decade. Noone is able to predict what will happen.

I think that you are right, that is probably the best way to think if you are a short term investor, and you want to be able to exit the positions quickly.
The case that you mention, could also go the other way, the coin could climb much higher, and you would have both the higher price and the high APR...It al comes down to what coins that you invest in...

For sure, if the price goes up, we don't even need to think about APR. We're already winning in this case. So, it's better to thing about the right coin to invest in instead.

So its good to care about it when it comes to HBD? But not Cub or Cake?

I don't know about cub or cake. I'm mostly comparing here investing in hive and HBD. Or any other existing well known and trusted stable coin. In my opinion if it's not a stable coin, trading it could be better than just holding and waiting for APR.

I really dont agree on that :D
I am all in on dividends, so the Apr matters a lot to me :D

The over 100% apr that Cub and Cake have is one of thr main reason to be in them at the moment, insane returns!

Passive income all the way, not gonna bother with trading and yet alone the fees for trade x)

If you are happy about that. I wish you big returns. Maybe I'm still afraid to invest in something else. It's hard to invest to something I don't understand. I don't know a lot about those DeFi things and others. I just blog, earn and trade a few coins. I'm in the step of learning.

#Thebuffetway!

I am just don't comfortable in trading, it takes a lot of time and effort with or without fees x)
Dividends are just easy, you look at a project or stock once and invest and you get returns now and then :D

I am also only invested in Cub and Cake, mainly because its the Leofinance team who are being the CubDefi project and I trust them and Khal a lot, also Cake have been here a while, but its all on CubDefi in the Kingdoms I invest in Defi at the moment.

Nothing crazy :D

That's cool. I'll learn about that.

Ohh. I think everybody knew haha xD

Take a look at the docs here then https://docs.cubdefi.com/ :D

ok