Lets say you deposit 1000, after the first cycle the input for 1000 is spent and in return you'd get 2 new inputs of 500 (+ interest, +fees (if applicable)), then at the next cycle you stake each of these 2 inputs and end up with 4 inputs of 250 (+interest, +fees (if applicable)). This process continues so you end up getting ever more inputs of ever decreasing values, each of which require staking.
I personally thought this process of creating ever more transactions continued indefinitely and as such used to manually send all these tiny inputs as larger values every few days. However, I have since learned that the wallet keeps the number of inputs in check itself. If there are too many unspent inputs then it may take several smaller inputs of appropriate coin age and stake them simultaneously, creating 1 new input and bringing the unspent input count back down.
I only wish more people would stake. The more coins removed from Bittrex, the better for all.
Thanks for the input. Yea I've getting about 1000 stake-mined transactions a day. All very small fractions of a full coin. I'd definitely like to see others take interest in the staking as well. I've almost got half the network weight. I get on average about 9.25 new coins a day. I sure do hope Bittrex keeps a tight lid on securing their day trader stashes. I'd hate to be a part of a coin that got hacked on an exchange. And I guess that big bag holder of 180,000 has it in cold storage. If he jumped in he'd hold near 65-70 percent of the network weight.