How is the percentage calculated?
Suppose there were a PoS coin with the following characteristics:
There are 100 stakeholders each of which has 10 coins at the beginning.
There are 100 blocks produced per day and the block reward is 1 coin. (Assume there are no tx fees.)
What would the APR for this coin be and why?
Basically each pos coin has a staking term. i'll use hobonickels as an example. Every 10 days it mints .025% of your coin holdings. So if you had a 100 coins, you'd generate about .o75% extra coins a month. Over a year, this comes to about %90, return not including the big benefit of compound interest. To generate pos coins, in most cases you just have to leave your wallet running, its quite easy.
Thank you. This was very helpful. It sounds like the block reward for staking is a percentage of your stake, rather than a constant. If it were a constant reward (like bitcoin's 25 BTC reward at the moment), then the reward as a percent of your coins would decrease over time.
In my example, on the first day everyone could expect to stake one block increasing their coins by 10% so they all have 11 instead of 10. They each still have 1% of the total coins, so on the second day each could expect to have 12 coins instead of 11. However, as a percentage they have only increased their coins by roughly 9% on Day 2.
Every High Stake coin is different... some are stable and some are crazy experiments...
You have to look closely at the Dev, the history, and the community.
In the mid-range 100-200%...
People that stake correctly do extremely well versus people who dabble and complain...
And people that get compounding going for a year or more can really kill it.
If you look at TEK, an established coin... it pays 40% every 30 days... or 480% nominal rate.
But if you let it ride... compounded = 1.4 ^ 12 = 5,600%.
Very few people have the clarity and discipline to compound these babies for one year...
But there's a few people have totally cleaned up on TEK, HBN, and CAP.
(The jury is still out on HYP... but the compounding is insane... >> 10,000%)
The key now is to ignore gimmick coins, create better liquidity for the legit ones and evolve the general idea.
Just remember, Bitcoin spends 20%/year on network security...
So any PoS coin rates should START at 20%... the real value of securing the network...
Coins paying 1% are ripping you off... they are scamming you for free security.
