APR

APR expresses what a liquidity position might earn over a year if recent conditions held. For an AMM pool, the input is fee income: every swap pays a fixed percentage into the pool, and that income is divided across all provided liquidity. Annualizing a recent window of fees against the pool's current value produces the APR figure.

The number is a projection, not a promise. Fee income depends on trading volume, which changes daily, and the value of the position depends on the prices of both pooled assets. A pool showing a high APR after one busy week can show a much lower one after a quiet month. APR also excludes compounding by definition; it assumes earnings sit still rather than being redeposited.

When comparing pools, read APR alongside TVL and volume. A small pool can post a striking APR from a handful of trades precisely because there is little liquidity sharing the fees, while a deep pool's lower APR may rest on steadier volume. The projection only becomes meaningful when judged against the liquidity and activity behind it.