High APR

Definition ∞ High APR refers to a significantly elevated Annual Percentage Rate, indicating a substantial return on an investment or a high cost of borrowing. In digital asset markets, particularly within decentralized finance DeFi protocols, high APR often signifies the annualized interest yield offered on deposited cryptocurrency assets. These rates are typically dynamic and reflect market demand for borrowing the underlying assets or rewards for providing liquidity. Such rates can be attractive but also correlate with increased risk factors.
Context ∞ High APRs in DeFi platforms are a prominent feature in crypto news, often attracting users seeking considerable returns on their digital holdings. However, these high rates frequently accompany considerable volatility, smart contract risks, and impermanent loss in liquidity pools. Regulatory bodies are increasingly scrutinizing platforms offering high APRs to ensure transparency and adequate risk disclosure to participants.