Calculate staking rewards with user-supplied APY and compounding frequency

How staking rewards actually compound

Staking returns are paid out in the same asset being staked. When you stake an asset at 5% APY, you earn 5% more of that asset per year, not 5% more in fiat terms. The fiat value of those rewards then rises or falls with the asset's market price, but the asset-denominated yield is what the protocol actually pays. This matters because many staking calculators confuse fiat-denominated compounding with asset-denominated compounding — the results are different whenever the asset price moves.

How the math works

Final balance = Principal × (1 + APY/n)^(n × years), where n is the compounding frequency per year. Most Proof-of-Stake protocols compound rewards continuously or near-continuously — every block, or every epoch. The calculator lets you specify the compounding frequency (daily, weekly, monthly, annual) so you can model the specific protocol you are using. Daily compounding produces slightly higher yield than annual at the same nominal APY, with the difference becoming larger as APY increases.

Why APR is different from APY

Some protocols quote APR (annual percentage rate) — the simple non-compounded rate. Others quote APY (annual percentage yield) — the effectively-compounded rate. At 10% APR with daily compounding, APY is roughly 10.52%. At 100% APR with daily compounding, APY is roughly 171%. At very high APRs the gap is enormous. Always check which one the protocol is quoting before plugging into the calculator; treating APR as APY or vice versa meaningfully misstates the projection.

What affects staking APY over time

Staking yields are not fixed. Protocol APYs move with network conditions: total staked supply, inflation rate, transaction volume, and protocol-level parameters. A staking APY of 8% today could be 5% in a year, or 12% — depending on how many other holders stake and how the protocol's monetary policy adjusts. The projection is an extrapolation of today's rate. For long time horizons, consider running scenarios at lower APYs (say, half of current) to understand how sensitive the final balance is to yield compression.

Risks the calculator does not model

Five risks to consider that the tool does not price in: slashing (loss of a portion of stake for validator misbehaviour), liquidity risk (unbonding periods on many protocols lock the asset for days or weeks), protocol risk (smart contract bugs or governance changes can impact rewards), price risk (the underlying asset can lose value in fiat terms even while earning asset-denominated yield), and validator risk (choosing a validator that underperforms or exit-scams can cost you rewards or principal). Staking returns look like interest but behave more like an operationally-involved investment with meaningful tail risk.