Staking rewards in the Venga app are calculated based on Rewards Per Year (RPY), an annualized percentage rate indicating the potential return you could earn over a 12-month period by staking your cryptocurrency.
Understanding RPY
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RPY (Rewards Per Year) is expressed as a percentage and provides an estimate of your annual earnings from staking.
How Rewards Are Calculated
Your staking rewards are directly proportional to the amount of cryptocurrency you stake. The formula used is:
Anual Reward = Amount Staked x (RPY/100)
Example Calculation:
If you stake 1 ETH with an RPY of 3.5%, your annualized rewards would be calculated as:
1 ETH x (3.5/100) = 0.035 ETH per year assuming you stake the asset for 1 year.
Compounding Rewards
If you enable staking autorenewal in the Venga app, your earned rewards are automatically added to your initial stake. This creates a compounding effect, which increases your potential earnings over time.
Example of Compounding:
Continuing from the previous example, after one year, you’d have:
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Initial stake: 1 ETH
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Rewards earned: 0.035 ETH
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New total after 1 year: 1.035 ETH
In the second year, your rewards would now be calculated based on 1.035 ETH:
1.035 x (3.5/100) = 0.036225 ETH per year
Factors Affecting Your Actual RPY
Actual rewards can fluctuate due to several network-related factors:
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Number of participants staking
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Network difficulty
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Inflation rates of the asset
Due to these variables, your actual RPY may differ from the initial estimate.
Adjustments to RPY
Venga may adjust the RPY for new staking periods without prior notice, depending on changes in network conditions or asset parameters.
Conclusion
Understanding how staking rewards are calculated, including the power of compounding and the factors affecting actual returns, helps you optimize your staking strategy to maximize earnings.