# What means APY?

Annual Percentage Yield (APY) is the annualized rate of return from an investment, factoring in compound interest that accrues or grows with the balance. Compound interest includes interest earned from the initial deposit, plus the interest earned on that interest.

XEP has a 3% annual reward rate (APY) based on the block reward schedule. The total rate of inflation on the whole blockchain is less than 3% APY, because not all XEP holders participate in the staking mechanism. The only way XEP holders can earn interest is by using an official XEP Desktop Wallet and keep it unlocked.

## Example APY Calculation

Let us calculate a 14-day APY is an annualized yield using 14-day returns. It’s calculated by taking the net difference in price from 14 days ago and today and generating an annual percentage.

The formula to calculate 14-day APY is as follows:

APY = (X − Y − Z) ÷ Y × 365/14

Where:

X = the price at the end of the 14-day period
Y = the price at the start of the 14-day period
Z = fees for the 14-day period (if any)

The calculated amount helps investors to understand the yield or return for the given time period (in our example 14 days).

## Slightly more than 3% APY possible

The official staking rewards for XEP are up 3% APY. However, you can actually receive more than 3% XEP per year, if you continously stake. An example will illustrate this:

Let’s say you stake 1,000,000 XEP coins. After one year of staking, you will have 1,030,000 XEP (30,000 XEP received from staking). But since you already earn interest already over time (compound interest), your 1,002,500 XEP (after one month) increase the base value to be staked in the months to come. As a result, you will earn slightly more than 3% XEP APY if you stake 24/7 over a long period.

Another thing to keep in mind that staking only makes sense if you own enough XEPs, as you compete with other network participants. The suggested minimum amount for staking is currently at least 1 million XEP coins.