How staking rewards compound
If rewards are automatically restaked, your balance grows exponentially: 1,000 tokens at 5% APR compounded daily becomes about 1,051.3 tokens in a year, versus 1,050 with no compounding. The gap is small at low rates but widens fast — at 20% APR, daily compounding yields 22.1% effective. Whether compounding happens automatically depends on the chain and whether you stake solo, through a pool, or via liquid staking.
Token price swamps yield
A 5% token yield means little if the token drops 40%. In dollar terms, ending value = tokens × price, so a −30% price move erases six years of 5% yield. That's why the calculator asks for a price assumption: run it at 0%, at a plausible gain, and at a painful loss to see whether the yield genuinely compensates you for holding the asset.
Costs and risks the APR hides
Validators and staking services take a commission (commonly 5–15% of rewards), some networks impose unbonding periods of days to weeks during which you can't sell, and proof-of-stake chains can slash a portion of stake for validator misbehavior. In the US, staking rewards are generally taxed as ordinary income at their value when received — before you've sold anything.
How to use this calculator
Enter your stake size in tokens, the network APR, how often rewards restake (daily, weekly, monthly, or not at all), your holding period, and an assumed token price change. The output separates the two forces at work: how many tokens you end with — pure yield plus compounding — and what the position is worth in dollars, which is that token count multiplied by the assumed ending price.
A worked example
Stake 2,000 tokens at 6% APR compounded daily for two years. The token balance grows to about 2,000 × e(0.06 × 2) ≈ 2,255 — a gain of 255 tokens, or roughly 12.75%. If the token price is flat, that yield is your whole return. But if the price falls 25% over those two years, the dollar value of the larger pile is still below where you started: the yield didn't cover the price drop. That gap is the entire reason the price assumption sits on the form.