# What is APY?

**APY** stands for Annual Percentage Yield. This measures the real rate of return on your principal tokens amount by taking into account the effect of compounding interest. In the case of Pounder Protocol, your $POUND tokens represent your principal, and the compound interest is added periodically every 30 minutes. After these 30 minutes, your current amount of token and your interest are added together, which then will be used for the next reward period.

This allows your balance to not grow linearly but exponentially over time! Assuming a daily compound interest of <mark style="color:blue;">**1.75%**</mark>, if you start with 1 $POUND token on day 1, after a year, your balance will grow to about <mark style="color:blue;">**561**</mark><mark style="color:blue;"><mark style="color:green;">**.**<mark style="color:green;"></mark><mark style="color:blue;">**42 $POUND**</mark><mark style="color:blue;">.</mark> That is the power of compound interest!

![](/files/8mPBIIwLtbNSNBxQs12o)


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