Crypto / Evergreen
More tokens can still mean less money.
A quoted crypto interest rate cannot explain the value or accessibility of the final balance.
Measure token quantity, token price, and counterparty exposure separately before interpreting a yield.
Ask what earns the payment
An interest-bearing crypto account can involve lending or other activities undertaken by a provider. The SEC's investor bulletin describes risks including market-price changes, illiquidity, and provider failure. A payment labeled interest does not explain those underlying activities. Ask which asset is owed, who owes it, what funds the payment, and whether the displayed rate is historical, variable, or a conditional illustration. Lending interest is also different from a protocol reward: different arrangements need different explanations. Similar percentages do not make their contractual claims interchangeable.
Keep the unit of measurement visible
Suppose a fictional account starts with 100 tokens worth 10 dollars each, or 1,000 dollars. It pays 10 additional tokens over a year, and all 110 tokens are available at year-end. If the token price is then 7 dollars, the position is worth 770 dollars. Quantity increased 10%, while the dollar value fell 23%, before fees and taxes. These invented outcomes assume no other contributions or withdrawals. They are not a quote, forecast, or suggested yield. The two percentage changes answer different questions about the same position.
Separate market loss from credit loss
Now change the example. The token remains worth 10 dollars, but the fictional provider cannot return the full amount owed. A market-price calculation alone cannot measure that contractual shortfall. Conversely, a solvent provider returning every token does not protect against a decline in the token's price. A useful practice sheet has separate rows for units owed, units actually recoverable, price assumptions, withdrawal conditions, and costs. Filling every row with the advertised interest rate hides the mechanisms that can change the outcome. A high rate is a question to investigate, not proof that the risk has been compensated adequately.
Read the terms before annualizing
Compare an offer paying a variable rate with one displaying an annualized illustration based on a short period. Record payment currency, lockups, withdrawal gates, fees, and whether rewards are reinvested in the calculation. Do not extrapolate a temporary incentive indefinitely. The learning goal is to reconstruct a result in a consistent currency and identify promises that depend on another party. This framework does not assess a named provider or determine whether any crypto lending activity fits a reader's needs. Losses can include all money committed.
A global perspective
Tax treatment, product availability, and creditor rights vary. Crypto lending, staking, and insured bank deposits are different arrangements; do not transfer one category's protections to another.
Sources & further reading
SEC Investor.gov — Crypto Asset Interest-bearing Accounts, February 14, 2022 ↗Sources checked Oct 18, 2026. Examples are original illustrations. No affiliation with cited organizations.
Make the idea stick.
Mark complete when you are ready. Reaching the end alone does not mark a lesson complete.
What assumption in this guide would change the result in a different situation? Revisit the example and explain that change in your own words.
Explore crypto →