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# APY Explanation

Describing the Annual Percentage Yield in detail.

APY is abbreviated as Annual Percentage Yield. This calculates the real rate of return on your principal tokens by factoring in the effect of compounding interest. In the case of iDot Finance, your iDot tokens represent your principal, and compound interest is added on a regular basis during each Rebase event (Every 24 hours).

Your new principal amount is equal to the sum of your then-current iDot token amount and your new rebase token amount. This total is used to calculate your next rebase rewards.

One fascinating aspect of APY is that your balance will grow exponentially rather than linearly over time! Assuming a event compound interest rate of

**0.9599%**, at day 1 if you start with a balance of**1000**iDot tokens, your balance will grow to approximately**51,669.75**iDot tokens at day 365. Compound interest has that kind of power to change your life and others!*Albert Einstein once said “*

**Compound interest is the eighth wonder of the world***. He who understands it, earns it; he who doesn't, pays it”.*

Last modified 8mo ago