Frequently Asked Questions
How are staking rewards calculated?
Rewards are based on the protocol's APY with compound interest. The formula is: Final = Principal x (1 + APY/n)^(n x t), where n is compounding frequency and t is time in years. Liquid staking protocols auto-compound for you.
What is the difference between APR and APY?
APR is simple interest (no compounding). APY includes compound interest. 3.5% APR compounded daily = ~3.56% APY. Liquid staking protocols report APY since they auto-compound.
Is liquid staking better than native?
Liquid staking gives you a tradeable token (stETH, rETH) keeping capital liquid. Native staking locks tokens but may offer slightly higher APY. Liquid staking also enables DeFi composability for additional yield.
What are the main staking risks?
Smart contract bugs, slashing penalties (validator downtime/misbehavior), price drops exceeding rewards earned, lock-up periods, and protocol governance risks. Diversify across multiple protocols.
How often do rewards compound?
Lido: daily via stETH rebasing. Rocket Pool: continuous via rETH price appreciation. Solana: per epoch (~2 days). Native ETH: per epoch (~6.4 min) but requires manual restaking.