# 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 Luna Ape, your $LUNAPE tokens represent your principal, and the compound interest is added periodically on every Rebase event (Every 30 minutes).

Your new principal amount is your then current Luna Ape token amount, plus your new rebase token amount. This total amount is what gets calculated for your next rebase rewards.

One interesting fact about APY is that your balance will grow not linearly but exponentially over time! Assuming a daily compound interest of 2.1%, if you start with a balance of 100 $LUNAPE on day 1, after a year, your balance will grow to about 199875 $LUNAPE. That is the power of compound interest!

![](https://3978514422-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FjIDMFQ6MYdt8TrhWzR48%2Fuploads%2FTqj13izPpmPm1HHtqghK%2F20220728_070932_0000.png?alt=media\&token=9148a891-522f-41d4-9c5e-b46e3e92e541)
