What this is
At least one component of the reward stream is paid in an asset different from the principal currency, and the APR conversion for that component uses a reference price set by the exchange, not an external market price. The typical case is a launchpool: principal in USDT, rewards in a newly listed project token. The exchange translates the reward quantity into an annualized yield figure on the product page; that translation need not reflect the token’s tradable price in the open market.
What it means for you
Whether the headline APR is realizable depends on whether the reward token can be sold in the open market at a price close to the exchange’s reference. A material drawdown on the secondary market translates directly into a lower realized yield. Principal is not at risk (stablecoin principal still settles in the principal asset), but the realized yield on what is marketed as a high-APR product can compress to baseline or below.
In practice
A CEX launchpool USDT pool with principal in USDT and rewards paid in a newly listed token, WLFI. The exchange uses its own reference price to publish a 12.5% APR on the product page. WLFI drops about 40% on the secondary market within two weeks of its public listing; at market prices, the realized annualized yield works out to roughly 7.5%. The USDT principal continues to settle in USDT and is unaffected by the token’s drawdown.