How does the Staking reward distribution work?
Instead of receiving daily reward payouts, your staked assets will be represented by shares that appreciate in value over time. As rewards accrue, the exchange rate between your shares and the underlying asset improves.
Example: ETH Staking with 5% APY (Illustration purposes only)
Initial Stake (Day 0):
1 ETH = 1000 shares (0.001 ETH per share)
👉 Current value: 3300 USD (1 ETH = 3300 USD)
After 30 days:
👉 Your 1000 shares are now worth 1.00411 ETH (0.00100411 ETH per share)
- Original stake: 1 ETH
- Accrued rewards: 0.00411 ETH (30 days of 5% APY)
Current value: 3313.63 USD (assuming 1 ETH still = 3300 USD)
After 365 days (1 year):
👉 Your 1000 shares are now worth 1.05 ETH (0.00105 ETH per share)
- Original stake: 1 ETH
- Accrued rewards: 0.05 ETH (365 days of 5% APY)
Current value: 3465 USD (assuming 1 ETH still = 3300 USD)
When you unstake:
👉 You redeem 1000 shares for their current ETH value
- If you unstake after 1 year, you'd receive 1.05 ETH
- This is when the rewards (0.05 ETH) become taxable
Why are you changing the way staking rewards are distributed?
We're upgrading our system to make it more tax-efficient for our users. This change allows you to accumulate rewards without triggering taxable events on each small distribution.
Will I still earn the same amount of rewards under the new system?
Yes, the actual reward rate remains the same. The difference is in how these rewards are reflected in your account and when they become taxable.
How can I see my accumulated rewards if they're not distributed daily?
You'll be able to see the increasing value of your shares in your Portfolio tab in the app under ‘Positions’. This represents your initial staking principal amount plus accumulated rewards.
When can I claim my rewards under the new system?
You can redeem your shares for the underlying asset (including accumulated rewards) at any time. This is when you would claim your rewards. This is what it would look like in the tax report (illustration only).
Will that affect my Staking Fixed Term allocations?
If you have assets currently in Staking, including those in Fixed Term (formerly called Freezer), they will be automatically converted to Flexible Term assets under the new system. Please note: DFI staking is excluded from this new tax-optimized system and will continue to operate as before.
What happens to the rewards I've already earned before this change?
Any rewards earned before the change will be credited to your account as usual. The new system will apply to rewards earned after the change is implemented.
Will this change affect all cryptocurrencies on your platform, or just specific ones?
This change will apply to all tokens supported under our Staking product, with the exception of DFI.