How staking rewards are calculated
Staking locks tokens to help secure a proof-of-stake network, and pays you in the network's own token for doing so. Rewards are usually advertised as a percentage, but two different percentages circulate and they are not interchangeable. APR is the simple annual rate with no compounding. APY assumes rewards are restaked as they arrive and compound.
The gap between them depends on how often compounding happens. At a 12% APR compounded daily, the effective APY is roughly 12.75%. The higher the rate and the more frequent the compounding, the wider the gap — which is exactly why marketing material tends to quote APY while the protocol itself pays APR.
The part that dominates everything else is that rewards are denominated in the asset. Earning 12% more of a token that falls 20% still leaves you down. Staking yield is a modest tailwind bolted onto a volatile price, and the price is doing most of the work in either direction.
Worked example
1,000 tokens staked at a quoted 12% APR, with rewards restaked daily so n = 365. The token is worth 2.00 at the start.
| Input | Value |
|---|
| Amount staked | 1,000 tokens |
| Quoted APR | 12% |
| Compounding | Daily (n = 365) |
| Effective APY | 12.75% |
| Tokens after 1 year | 1,127.47 |
| Rewards earned | 127.47 tokens |
At an unchanged price of 2.00, that position is worth 2,254.95 against 2,000 at the start. But if the token falls 20% to 1.60, the same 1,127.47 tokens are worth 1,803.96 — a 9.8% loss despite every reward arriving exactly as promised. Yield does not protect you from price.
How to use this calculator
- Enter the quantity of tokens you intend to stake, not their current fiat value.
- Enter the rate the protocol actually pays, and check whether it is quoted as APR or APY.
- Set the compounding frequency to match how often you would genuinely restake, including any manual claim step.
- Read the result in tokens first, then apply a price scenario — including a falling one — to see the real outcome.
- Check the lock-up and unbonding period before committing, and subtract any commission the validator takes.
Frequently asked questions
What is the difference between APR and APY?
APR is the simple annual rate with no compounding. APY assumes rewards are restaked and earn further rewards. APY is always the higher figure at the same underlying rate, so comparing one platform's APY against another's APR makes the first look better than it is.
Does more frequent compounding always help?
Mathematically yes, but the gains shrink quickly past daily, and manual restaking usually carries a transaction fee. On small positions those fees can exceed the extra compounding entirely. Auto-compounding protocols solve this by batching, typically for a cut of the rewards.
What is an unbonding period?
A mandatory delay between requesting your tokens back and being able to move them, common on proof-of-stake networks and often measured in days or weeks. During it you usually earn nothing and cannot sell. If the price falls in that window, you watch it happen.
What is slashing and how likely is it?
Slashing is a protocol penalty that destroys part of a validator's stake for downtime or double-signing, and delegators can share the loss. It is uncommon on well-run validators but not zero. Spreading a stake across several independent validators limits the damage from any single failure.
Where does the yield actually come from?
On most networks it is new token issuance plus a share of transaction fees. Issuance dilutes non-stakers, so part of a headline yield is a transfer rather than growth. A yield far above the sector norm usually signals either heavy issuance or a risk that is not being advertised.
Are staking rewards taxable?
Frequently yes, and treatment varies widely — some jurisdictions tax rewards as income when received, others only on disposal, and the two approaches produce very different outcomes. Rules also change. Confirm the current position where you are resident, or with a professional.
This calculator is an educational tool. Results are estimates based on the inputs you provide and do not constitute financial advice. Verify figures with your bank, broker or a qualified advisor before acting on them.