How are staking rewards calculated and how do annual yields fluctuate?
Staking is a process that allows you to participate in securing a blockchain network by "locking" your tokens in a dedicated wallet. In return, you receive rewards in the form of new tokens.
At Coinhouse, the "Guaranteed Rate" calculation method is applied. Rather than displaying an indicative rate, the actual rate applied to your staked crypto assets is guaranteed, requiring no manual calculations or research.
- Real blockchain rate: 9.7%
- Guaranteed rate: 9%
- Applied yield: 9%
Reward Calculation Timelines
The annual yield may vary daily, leading to daily reward distributions based on when funds are placed:
- Funds placed today BEFORE 12 PM:
- Calculation period: Today 12:00 PM to tomorrow 12:00 PM
- Distribution: Tomorrow at 12:00 PM
- Funds placed today AFTER 12 PM:
- Calculation period: Tomorrow 12:00 PM to the day after tomorrow 12:00 PM
- Distribution: The day after tomorrow at 12:00 PM
Factors Influencing Yields (APY) & Market Value
The annual Percentage Yield (APY) can fluctuate due to:
- Total network tokens staked: A higher number of participants distributes rewards across a larger pool, reducing individual yield.
- Protocol policies: Adjustments to APY by protocols to encourage or discourage staking.
- Token inflation: The issuance of new tokens to reward stakers can dilute token value.
Impact of Token Price and Locked Funds
While token price does not directly alter the staking percentage calculation, it directly dictates the fiat (euro) value of your earned rewards:
- If token price increases: The euro value of earned rewards increases.
- If token price decreases: The euro value of earned rewards decreases.
- Example: Staking 1,000 tokens at €10 each (€10,000 invested) will double in euro reward value if the token price increases to €20.
Difference Between Staking and Delegation
Staking involves directly locking your tokens to participate in validating transactions on the network.
In contrast, delegation consists of entrusting your tokens to a validator or platform, which handles the staking on your behalf.
Delegation is often more accessible because it does not require technical skills or specific hardware.
The Risk of Slashing
Slashing is a penalty applied to validators (or stakers) who do not comply with the network rules, such as validating incorrect transactions or remaining offline for too long.
A portion of the staked tokens may be destroyed as a sanction.
This encourages validators to act honestly and maintain network security.
Conclusion
Staking is an interesting way to generate passive income with your cryptocurrencies. However, it is important to understand that returns may vary depending on network and market conditions.
Furthermore, the price of the token at the time of investment can influence the value of your rewards in euros, but not the calculation of the rewards itself.
If you have any further questions, we are at your disposal !
Monday to Friday : from 9:30 to 12:30 and 13:30 to 18:00.
Contact us by phone 👉 +33 1 82 88 29 51