# Target APY

#### What the APY includes

* **USD APY:** variable yield earned from real DeFi strategies.
* **Points APY:** an incentives component that fills the gap up to the current target.

#### How it works

The APY is modeled as:

`APY_shown = APY_USD + APY_points`

* If Sail's strategy pays more in USD yield, the points component decreases.
* If Sail's strategy pays less in USD yield, the points component increases, subject to the active incentives budget.

#### What “points APY” means

* Points APY is an *estimated equivalent rate* shown for clarity.
* Points are not USD, and they are not transferable today.
* Points APY is also the rate used to compute how many points you receive each day.

#### Important

* USD yield is variable. it can go up or down with market conditions.
* Target APY is not a guaranteed rate. it depends on available USD yield and the active points budget.
* In-app, Sail shows the breakdown between USD APY and points APY so you can see what is driving your total APY.


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