APY stands for Annual Percentage Yield. This measures the real rate of return on your principal amount by taking into account the effect of compounding interest. In the case of Aufin, your $AUN tokens represent your principal, and the compound interest is added periodically on every Rebase event (Every 10 minutes), otherwise known as an 'Epoch'.
Your new principal amount is your then current Aufin token amount, plus your new rebase token amount. This total amount is what gets calculated for your next rebase rewards.
The Power of Compound Interest - It is important to note that your balance will grow not linearly but exponentially over time. Taking a compound interest of 0.01613% / 10 minutes:
Example: If you started with a balance of only 1,000 $AUN on day 1, after a year, your balance will have grown to 4,804,190 $AUN.