How Is the Expected Return on Staking Calculated?
The expected return on staking is typically calculated as an Annual Percentage Yield (APY) based on the total amount of cryptocurrency staked, the total number of validators, and the network's issuance rate. It is dynamic and fluctuates based on network participation.
The formula generally involves (Rewards Earned / Staked Amount) (365 / Time Period) and can also include transaction fees earned, minus any potential slashing penalties.
Glossar
Return on Staking
Yield ⎊ Return on Staking (RoS) represents the percentage return earned by a participant for locking up cryptocurrency assets to support the operational security and consensus mechanism of a proof-of-stake blockchain network.
Expected Return
Calculation ⎊ This represents the weighted average of all potential payoff scenarios for a derivative position or portfolio, where the weights are the assigned probabilities of those specific outcomes materializing.
Annual Percentage Yield
Return ⎊ This metric quantifies the total annualized gain or loss on a crypto investment, factoring in both capital appreciation and any yield generated from staking or lending activities, presented as a simple percentage.