informationalVolume: ~1,800/mo

Compound Interest in DeFi

defi compound interestauto-compound crypto

Compound interest is powerful in traditional finance, but in DeFi it happens at crypto speed. Auto-compounding protocols can reinvest your rewards multiple times per day.

What is Compound Interest in DeFi?

Compound interest in DeFi is the process of reinvesting earned rewards to generate additional returns. Unlike traditional finance quarterly compounding, DeFi protocols can compound hourly or even per-block.

Key Benefits

  • ✓Exponential growth over time vs. simple interest
  • ✓Auto-compounders save gas and optimize timing
  • ✓Daily compounding significantly outperforms monthly
  • ✓Small APY differences compound to large gains over years

How to Get Started

For manual compounding, claim rewards and restake regularly. For auto-compounding, use protocols like Beefy or Yearn that handle it automatically. Factor in gas costs when deciding frequency.

Pro Tip

The formula for APY from APR: APY = (1 + APR/n)^n - 1, where n is compounds per year. Daily compounding on 20% APR gives ~22.1% APY. Hourly compounding gives ~22.14% APY.

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Frequently Asked Questions

What is FLPS staking and how does it work?

FLPS staking allows you to lock your FLPS tokens in the Floops protocol vault to earn a share of trading fees. When you stake, you receive sFLPS (staked FLPS) receipts representing your position. Your rewards accumulate in SOL based on your proportional share of the total staked pool.

What is the current lock period for staking?

The lock period is dynamic and based on the current market cap. At lower market caps, the lock period is 120 days. As the market cap grows toward $1 billion, the lock period decreases proportionally. When FLPS reaches $1B market cap, the lock period becomes 0 days (instant unlock).

How are staking rewards calculated?

Staking rewards are calculated using a MasterChef-style accumulator. The protocol collects trading fees and distributes 50% to Stakers, 40% to Lending Liquidity, and 10% to Dev.

Can I unstake early and what happens to my rewards?

Yes, you can unstake early, but you will forfeit any pending rewards. The protocol is designed to reward patient holders—if you unstake before your lock period expires, your pending SOL rewards are not claimable. Your staked FLPS tokens are always returned.

Ready to start your journey?

Start Staking