Staking Rewards

This guide explains how staking rewards are calculated and distributed on Monolythium.

Reward Sources

Stakers earn from two sources:

Source	Description	Distribution
Inflation	Newly minted LYTH	Based on stake weight
Transaction Fees	10% of all fees	Based on stake weight

Combined, these form the total staking yield.

Inflation Rewards

Inflation mints new LYTH each block, distributed to stakers:

Phase	Inflation Rate	Annual Mint (at 780M supply)
Phase 0	0%	0 LYTH
Phase 1	0.9%	~7,020,000 LYTH
Phase 2	8%	~62,400,000 LYTH

See Milestones for when each phase activates.

Per-Block Calculation

Block Reward = (Annual Inflation × Total Supply) / Blocks Per Year

At 2-second blocks (15,768,000 blocks/year):

• Phase 1: ~0.445 LYTH per block
• Phase 2: ~3.96 LYTH per block

Fee Rewards

Transaction fees are split:

• 90% burned (deflationary)
• 10% distributed to stakers

Fee rewards vary based on network activity. High transaction volume = higher fee rewards.

Reward Distribution

Validator vs Delegator

Block Reward
    │
    └── To Validator (proposer bonus + stake share)
            │
            ├── Commission (e.g., 10%)
            │       └── Kept by validator
            │
            └── Remainder (e.g., 90%)
                    └── Distributed to delegators

If you delegate 1,000 LYTH to a validator with 10% commission:

1. Your share of rewards is calculated
2. Validator takes 10% commission
3. You receive remaining 90%

Commission Impact

Validator Commission	Your Effective Yield
0%	Full staking APY
5%	95% of staking APY
10%	90% of staking APY
20%	80% of staking APY

Inverse Rank Rewards

Monolythium uses inverse rank-based reward distribution:

• Higher-staked validators receive slightly less reward per unit of stake
• Lower-staked validators receive slightly more reward per unit of stake

This encourages stake decentralization by making smaller validators more attractive.

How It Works

Rank 1 (highest stake):  Base reward × 0.95
Rank 26 (middle):        Base reward × 1.00
Rank 53 (lowest active): Base reward × 1.05

!!! note "Simplified Example" Actual multipliers are calculated dynamically based on validator count and distribution.

Impact on Delegators

Delegating to a lower-ranked validator can yield slightly higher returns, but consider:

• Lower stake may indicate less trust/track record
• All else equal, inverse rank rewards favor decentralization

Calculating Your Rewards

Estimated APY

Your APY = (Network Inflation × (1 - Validator Commission)) × Inverse Rank Multiplier

Rough estimates (Phase 2, 8% inflation):

Scenario	Approximate APY
Top validator, 10% commission	~6.8%
Mid validator, 10% commission	~7.2%
Lower validator, 5% commission	~8.0%

Actual returns vary based on network conditions.

Query Your Rewards

# Check accumulated rewards
monod query distribution rewards <your-address> <validator-address>

# Check all rewards across validators
monod query distribution rewards <your-address>

Claiming Rewards

Rewards accumulate and must be claimed manually:

# Claim from one validator
monod tx distribution withdraw-rewards <validator-address> \
  --from <your-key> \
  --chain-id <chain-id>

# Claim from all validators
monod tx distribution withdraw-all-rewards \
  --from <your-key> \
  --chain-id <chain-id>

!!! tip "Gas Costs" Claiming from multiple validators in one transaction is more gas-efficient than separate claims.

Compounding

Rewards don't automatically compound. To maximize returns:

1. Claim rewards periodically
2. Re-delegate claimed rewards
3. Repeat

Compounding Frequency

More frequent compounding = higher effective APY, but:

• Each claim costs gas
• Balance claim frequency with gas costs
• Monthly or weekly claiming is typical

Reward Timing

Event	Timing
Reward accrual	Every block (~2 seconds)
Available to claim	Immediately
Auto-compound	Not supported (manual claim required)

Slashing Impact on Rewards

If your validator is slashed:

• Your delegated stake is reduced
• Future rewards are based on reduced stake
• Accumulated unclaimed rewards are NOT slashed

Tax Considerations

!!! warning "Consult a Tax Professional" Staking rewards may be taxable income in your jurisdiction. Keep records of:

• Claim transactions
• Reward amounts
• Claim dates
• Token prices at claim time

FAQ

When do rewards start?

After rewards_start_height (see Milestones). Before this, only fee rewards are distributed.

Why aren't my rewards showing?

Rewards must accumulate. Check after several blocks, and ensure you're delegated to an active validator.

Can I lose unclaimed rewards?

No. Unclaimed rewards remain available indefinitely. However, if you undelegate, claim rewards first.

Do inactive validators earn rewards?

No. Only validators in the active set (top 53 by stake) earn block rewards.

What's the difference between APY and APR?

• APR: Simple annual return without compounding
• APY: Effective return with compounding

Displayed rates typically show APR. Your actual APY depends on compounding frequency.

Related

• Staking Overview - Staking fundamentals
• Milestones - Inflation schedule
• Validator Economics - Validator perspective