Yield always has a counterparty
An 8% lending APY isn't free money — someone pays it, and the platform can fail. Size lending as risk capital, not savings. Compare with staking on the staking rewards calculator.
Lending yield, honestly counted
Lending platforms quote APY on a best-case basis. To see your real return, subtract three things: the rate variance (advertised rates float daily with utilization), any platform fee on interest, and — the big one — the counterparty risk you're not being paid enough for.
The compounding is real though. $10,000 at 8% APY compounded daily is $10,832 after a year; simple interest gives $10,800. Modest gap at 8%, meaningful at higher rates.
Rate history beats the current quote. A stablecoin market that spent the last six months oscillating between 3% and 12% will not deliver "8% APY" — it'll deliver whatever utilization dictates each day. And when a platform's rate sits far above everyone else's, that premium is the market pricing its risk. Celsius paid best-in-market right until it paid nothing; that spread was the warning, not the opportunity.