Bonus APY and Base APY: Which Layer the Extra Comes From

Conclusion first: when you see a high APY, the first thing to do isn't work out what you'd earn, it's find the cap. Inside the cap is the bonus tier; above it is the base tier, and the two are often several times apart.

How the tiers are designed

The usual wording: a stablecoin's Flexible product offers "X% on the first 500 coins, Y% above that". X is the number that made you click; Y is the product's real level, and X is typically several times Y.

Why design it that way?

Because the money in the two tiers comes from different places. Base-tier interest comes from the lending market; as much demand as there is, that's the interest. Bonus-tier money comes from the platform's customer acquisition budget; it's a marketing expense. Marketing budgets have to be capped in total, so the tier has to have a cap; without one, a single large depositor could eat the entire campaign budget.

From the platform's side that's perfectly sensible: use a fixed budget to let as many new users as possible experience "the interest is decent". From your side, the job is to recognise which part is marketing and which part is normal.

What the cap is measured against

There are a few variants, and you want to know which one applies before subscribing:

• Per-coin cap: the first N coins of a given asset earn the bonus tier. The most common form.
• Per-account cap: a total for the whole account under that campaign, shared across products.
• New money only: only funds transferred in during the campaign count; what you already had doesn't.
• New users only: available within a period after registration, and gone afterwards.

The third one causes the most confusion. You think moving money from Locked into Flexible will earn the high rate, and then find the platform judged it not to be new money and paid the base tier. That rule is usually in the campaign details, and the campaign details usually need one more click to reach.

How the blended APY works out

Say the bonus tier covers the first 500 coins and you deposited 2,000. Then 500 earn the high rate and 1,500 earn the base rate. Your actual blended APY is the weighted average of the two, weighted by the amounts.

In words: blended APY = (bonus-tier amount × bonus APY + excess amount × base APY) ÷ total amount.

The result usually surprises people. If the bonus tier is only a quarter of what you put in, then however pretty that tier's number is, the blend comes out very close to the base tier. The more you deposit, the closer it gets; that's arithmetic, not the platform being stingy.

To keep it simple, run the two portions separately through the interest estimator, add the two interest figures, and divide by the total principal. That's your real APY. Two extra minutes, and it avoids the illusion of being on the high rate.

A counter-intuitive corollary

Since the bonus tier is capped, a portion on each of several platforms can produce a higher blended APY than one large amount on one platform: because you fill every platform's bonus tier.

That holds mathematically, but weigh three things before acting on it: every extra platform is extra platform risk; transfers cost network fees; and you have another set of security settings and another set of rules to keep track of. For small amounts, the hassle usually costs more than the extra interest. So our position is: know the principle, and don't exhaust yourself over it.

The truth behind "my APY dropped after I added money"

One of the most common beginner confusions, and worth spelling out.

You had 300 coins in, all inside the bonus tier, and the page showed a high APY. You topped up to 1,500, the extra 1,000 only earn the base tier, and the blended APY you see falls. It feels like "the platform lowered my rate"; what happened is "your money moved into a different tier".

Similar cases: a campaign ends, the bonus tier disappears, and the APY returns to base; or you redeem and re-subscribe and are judged to be no longer campaign-period money. None of these is the platform unilaterally changing the rules — the rules said these conditions all along.

There's only one way to avoid that gap: before subscribing, read the cap, the campaign end date and the restriction on where funds came from. Once you have, you'll find many products are far more modest than they first look, and that's the number your decision should be based on.

Tiers read differently across product types

Tiering isn't unique to Flexible; other products use it too, with different meanings.

Flexible tiers

The most common, usually "the first X coins at the high rate". Because Flexible lets you move in and out at any time, the cap is computed against your current holdings in real time: deposit more today and the excess immediately earns base; redeem some tomorrow and you're back inside the high tier. It's dynamic.

Locked tiers

High rates on Locked products are often a scramble: a tranche of quota is released, first come first served, and once it's gone only the base tier remains. Here "cap" means "is there a place left in this round" rather than "how much you can deposit". Some people watch for quota releases, which is fine in itself. Just don't rearrange your cash plans on the spot to chase one.

Campaign tiers

Layered on top of the first two: meet a condition (new user, new money, complete a task) for extra points, usually with their own cap and deadline. These are separate books from the base product's cap, so when reading the terms, be clear which sentence describes which layer.

When all three appear on one page, the classic misreading is adding the three numbers together as what you'll receive. The safe method: after reading, recite to yourself "of my money, this much earns this tier". If you can't say it, you haven't understood it yet.

How to use the bonus tier well

None of this means the bonus tier is worthless. It's a real concession; it just has to be used correctly.

One: small balances should fill the bonus tier first. If your amount happens to sit around the cap, then for you the product's APY is that high number, and it's a good deal.

Two: large balances should be evaluated at the base tier. Decide whether to deposit based on what the base tier pays, and treat the bonus tier as a small extra. Estimating returns on a large amount using the headline rate guarantees disappointment.

Three: don't rearrange your money for the bonus tier. Early-redeeming a Locked product to qualify as "new money", or making a hurried decision to beat a campaign deadline — the losses from those often exceed the bonus. Campaigns come round again; you won't miss out permanently.

Why platforms design it this way

Think it through from the platform's side and a lot of the rules stop feeling awkward.

Acquiring customers costs money. Every industry pays to bring in a new user; the only difference is whether that money goes into advertising or straight to the user as a subsidy. Tiered APY is the latter, turning an ad budget into interest and handing it to people willing to try the product.

And a budget has to have a ceiling. Without a cap, a handful of large depositors would absorb the lot, and the "let lots of people try it" effect wouldn't happen at all.

"New money only" follows the same logic: the platform wants to attract money that isn't here yet, not to pay extra interest on money that already is. Perfectly sensible as a business decision: you just need to know which category you're in.

Frankly, we don't chase these limited-time boosts.

The reason is that the amount is tiny once you calculate it: the cap usually covers only the first few hundred to few thousand coins, the excess falls back to base, and after weighting the two the blended APY isn't much different from an ordinary day. Rearranging your money to hit a campaign window doesn't save enough to justify the effort. If we qualify, we take it; if not, fine.

Understand this layer and your attitude to these campaigns settles down naturally: they're neither a gift to you nor a trap set for you. They're a customer acquisition cost with a price tag on it. Qualify and take it; don't qualify and let it go. There's no need to disrupt your own arrangements to fit the conditions.

On the "new users get more than loyal ones" complaint

This happens in every industry and it happens here. Long-standing users can't access new-user exclusives, and it feels unfair. But from another angle: what should actually keep you at a platform is whether the product does the job, whether redemption runs smoothly and whether the platform is dependable: not the subsidy. Those are where the long-term value sits.

If a platform has no reason to keep you other than a new-user subsidy, the problem isn't how the subsidy is distributed. The problem is the platform.

Why the APY moves daily is covered separately in why the APY changes every day; the structural differences between products are in the four product types compared.