Staking Compound Calculator

The gap between a quoted APR and the yield actually realised is entirely a function of how often rewards re-enter the principal. The governing expression is A = P times (1 + r/n) raised to the power n times t, and the effective annual yield is (1 + r/n)^n minus 1. As n grows, that expression converges on e^r minus 1, which places a hard ceiling on what more frequent compounding can ever buy. At 12 percent APR the ceiling is 12.75 percent: monthly compounding already reaches about 12.68 percent, daily about 12.747 percent, and hourly about 12.749 percent. The practical lesson is that the jump from never compounding to compounding monthly is worth far more than every increase in frequency after that combined. That asymmetry is what makes claim frequency an optimisation problem rather than a maximisation one. Each manual claim and restake costs a transaction fee that is roughly constant, while the marginal yield gained by shortening the interval shrinks quickly. On a network where a claim costs a few dollars, weekly claiming on a small position destroys more value than it creates, whereas on a low-fee chain the same cadence is free money. The break-even point scales with position size, so the same protocol can justify daily compounding for a large stake and quarterly compounding for a small one. Two caveats apply to any projection here: it assumes the rate holds constant, whereas emissions-funded DeFi yields typically fall as more capital enters, and it ignores lock-ups, withdrawal queues and the price risk of the staked token itself.

Compound interest is one of the oldest quantitative techniques in finance, appearing in Babylonian lending problems and formalised in the interest tables that European merchants used from the seventeenth century. Its mathematical limit was discovered as a side effect of exactly the question this calculator asks. In 1683 Jacob Bernoulli, examining what happens to a sum compounded ever more frequently within a single year, found that the result approaches a fixed constant rather than growing without bound; that constant is e, approximately 2.71828, and the continuously compounded case is its most direct financial interpretation. The distinction between a quoted rate and a realised yield later became a matter of law because it was so easily used to mislead. In the United States, the Truth in Lending Act of 1968 required lenders to disclose a standardised APR, and the Truth in Savings Act of 1991 introduced APY so that deposit products with different compounding schedules could be compared on one number. Cryptocurrency staking inherited both terms but not the disclosure rules, and protocols advertise whichever figure is larger. The distinction became commercially significant in June 2020, when Compound Finance began distributing its governance token to users and triggered the yield farming period, during which triple-digit advertised APRs made compounding frequency genuinely material. Automated vaults such as Yearn Finance and Beefy Finance emerged in that window specifically to batch and socialise the transaction costs of frequent compounding.