Clear DefinitionsRestaking Rewards
Pronunciation
[ree-stay-king ree-wôrds]
Analogy
Restaking Rewards are like rolling over interest from a savings account back into the account to earn interest on the interest.
Definition
Key Points Intro
Restaking Rewards amplify earnings via:
Key Points
Yield acceleration: Rewards generate further rewards.
Periodic compounding: Occurs each reward cycle or epoch.
Protocol automation: Smart contracts handle restake logic.
Net APY boost: Enhances effective annual yield.
Example
In a Cosmos-based chain, a delegator’s staking rewards are automatically redelegated each day, increasing their bonded ATOM balance for the next day's reward calculation.
Technical Deep Dive
At the end of each epoch, the staking module calculates validator rewards and credits them to the delegator’s withdrawable balance. A restaking script then calls the delegate function to bond those tokens again. The on-chain state updates the delegator’s shares in the validator’s pool, adjusting future reward allocations.
Security Warning
Automated restake transactions can fail due to network congestion; failed restakes leave rewards unbonded.
Caveat
Restaking frequency must balance compounding benefits against transaction costs and unbonding delays.
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