The only difference: whether the return earns a return
Under simple interest the amount earned each period is fixed at principal × rate, and those earnings never enter the calculation again.
Under compound interest each period's return is added to the principal, so the next period earns on principal plus past earnings — interest on interest.
Formulas
principal × (1 + rate × periods)principal × (1 + rate)^periodscompound final value − simple final valueWorked example (recompute it yourself)
Principal 1,000 USDT at 1% per period:
12 periods: simple = 1,000 × (1 + 0.01 × 12) = 1,120 USDT; compound = 1,000 × 1.01^12 ≈ 1,126.83 USDT; difference 6.83 USDT.
60 periods: simple = 1,000 × 1.6 = 1,600 USDT; compound = 1,000 × 1.01^60 ≈ 1,816.70 USDT; difference widens to 216.70 USDT.
Going from 12 to 60 periods is a 5x increase in length, but the gap grows from 6.83 to 216.70 — roughly 32x. Compounding accelerates over time.
Risk notice (please read)
The same formula describes losses: a negative rate compounded period after period shrinks the balance ever faster, and the longer it runs, the bigger the rebound needed to get back to even.
This is a mathematical simulation. No strategy is promised to sustain any entered rate, and the principal can lose value.
"1% per period" is a calculator input, not an achievable or sustainable return promise.
FAQ
When does the gap between simple and compound become obvious?
The more periods, the bigger the gap. At 1% per period, 12 periods differ by 6.83 USDT and 60 periods by 216.70 USDT — the gap grows faster than the period count.
Does compounding work on losses too?
Yes. Losses roll forward the same way: the remaining balance shrinks, so the gain needed to return to the original level keeps growing. That is the source of rebound asymmetry.
Which one should I use?
Follow the product: if earnings are paid out and not reinvested, use simple interest; if they are folded back into principal, use compound. Using the wrong convention skews the result.