APR vs APY: What's the Difference and Which Does 8lends Quote?

APR: Annual Percentage Rate

APR is the straightforward annualisation of a periodic interest rate without compounding. If a platform pays 1.5% per month, the APR is 1.5% times 12, or 18%. No reinvestment assumption is built in. Traditional banks and most EU-regulated P2P lenders quote APR because it is mandated by consumer-credit legislation.

APY: Annual Percentage Yield

APY adds compound interest to the calculation. The same 1.5% monthly rate, compounded monthly, delivers an APY of approximately 19.56% - about 1.5 percentage points higher than the APR. Crypto platforms often quote APY because DeFi protocols automatically reinvest yield, making compounding the natural default.

What Does 8lends Quote?

8lends advertises target returns of 18-25%. The platform's public-facing materials do not consistently label this figure as APR or APY, and the distinction is not clarified in the terms of service visible at the time of writing. Given that 8lends settles in USDC and operates on blockchain rails, the figure may reflect an annualised projection rather than a compound calculation - but this is not explicitly stated.

Verify the convention directly with 8lends before making assumptions about compounding. If you reinvest manually, your effective yield will exceed the quoted rate; if you withdraw monthly, the simple annualised figure is what you realise. Capital at risk in either case.

Why It Matters

The APR-APY gap widens at higher rates. A 20% APR becomes roughly 21.9% APY with monthly compounding - modest, but material over a multi-year horizon. Comparing an APR-quoted platform against an APY-quoted one without converting both to the same basis can lead to mistaken conclusions about which platform offers better value.

For a fuller assessment of 8lends' return structure and how it compares to other platforms, see our safety review and returns calculator.