What this is
The product applies tiered interest rates by principal size. The headline APR covers only the bottom tier (its ceiling is often a few hundred to a thousand dollars), with everything above accruing at a materially lower rate (the typical adjacent-tier gap is at least three percentage points). Realized interest is the weighted average across tiers, which dilutes as principal grows. The trap matters most in larger positions.
What it means for you
Estimating total return from the headline APR overstates, and the overstatement grows with the position size. Pull the tier schedule directly and compute the weighted APR at the intended position size; do not anchor planning on the headline figure. For positions of several thousand dollars and above, the weighted realized rate often runs at a multiple of distance below the headline.
In practice
A CEX USDT flexible-savings product with a headline APR of 12.5%. The tier schedule: the first 1,000 USDT accrues at 12.5%, anything above at 3%, applied marginally. A 5,000 USDT deposit yields a weighted APR of (1,000 × 12.5% + 4,000 × 3%) / 5,000 = 4.9%, a gap of 7.6 percentage points to the headline. A 50,000 USDT deposit compresses the weighted APR further to roughly 3.19%.