Understanding Staking Rewards

Easy 10 minutes

Where Do Staking Rewards Come From?

Staking rewards come from two main sources:

New token issuance - The network creates new coins to pay validators
Transaction fees - Users pay fees that go to stakers

APY vs APR

Term	Meaning	Example
APR	Simple interest, no compounding	10% APR on $1000 = $100/year
APY	Includes compounding	10% APY on $1000 = $105+/year

Compounding Power

If you reinvest (compound) your rewards, your earnings grow faster. Many staking protocols auto-compound, or you can manually restake rewards.

Typical Staking APY Ranges

Ethereum (ETH): 3-5%
Solana (SOL): 6-8%
Cardano (ADA): 4-5%
Polkadot (DOT): 10-14%
Cosmos (ATOM): 15-20%

High APY ≠ Good Investment

High staking rewards often come with high inflation. If a coin pays 20% APY but inflates 25%, you're losing purchasing power. Always consider token economics.

Factors Affecting Your Rewards

Amount staked - More stake = more rewards
Validator choice - Commission rates vary
Network participation - Total staked affects rates
Lock period - Longer locks may earn more

Calculate Your Potential Earnings

Simple formula: Stake × APY = Annual Reward

Example: 10 ETH × 4% APY = 0.4 ETH per year

Staking Calculators

Use stakingrewards.com for detailed calculations and comparisons across different cryptocurrencies.