Staking Income | High APY

Hydra is a Proof of Stake blockchain and as such allows coin holders to stake and earn staking income in the process. In short, stakers get rewarded with block rewards for their contribution to the maintenance and security of the chain. You can calculate your estimated APY with the staking calculator below:

Block Rewards - Transactional Economy

Every transaction on the Hydra chain requires a transaction fee. The fee policy is regularly voted on by coin holders and the result of these votes is binding for all network participants. This way the transactional economy on the chain can be steered by the network owners.

For you as a staker this translates to direct staking income. The more transactions there are, the higher the staking income for stakers will be. When a staker validates a block, it will be rewarded by all the transaction fees accumulated in that particular block. Let's examine a few examples:

Example 1
Example 2
Example 3
Example 1
  • Transaction fees set at $0.10 (via votum)

  • 1 transaction per second executed on the chain

  • Average block time of 128 seconds

The average block will accumulate 128 transactions at $0.10 each, and thus yield a reward of $12.8 to the staker validating it.

Example 2
  • Transaction fees set at $0.20 (via votum)

  • 1 transaction per second executed on the chain

  • Average block time of 128 seconds

The average block will accumulate 128 transactions at $0.20 each, and thus yield a reward of $25.6 to the staker validating it.

Example 3
  • Transaction fees set at $0.10 (via votum)

  • 10 transactions per second executed on the chain

  • Average block time of 128 seconds

The average block will accumulate 1280 transactions at $0.10 each, and thus yield a reward of $128 to the staker validating it.

The reward calculated here is on a block by block basis.

In the above scenario, we assumed a constant price of $0.10 per transaction. However, this would only be fixed for regular coin transactions. Smart contract based transactions, such as token or DEX transactions, are much more data-heavy and will therefore cost more. The heavier the transaction, the higher the transaction fee. Below are some examples for better understanding:

Coin Transaction
Token Transaction
DEX Trade
Arbitrage Trade
Coin Transaction

Simple HYDRA transaction with little on-chain data ($0.10). This is the cheapest transaction type.

Token Transaction

Every token is based on a smart contract, which has additional data requirements and are thus more expensive to process on-chain ($0.20).

DEX Trade

A basic DEX trade with a token/coin pair consists of the following elements:

  • Coin transaction ($0.10)

  • Token transaction ($0.20)

  • DEX smart contract execution ($0.25)

The total trading fee thus amounts to $0.55.

Arbitrage Trade

Arbitrage trades between two different DEX pools would require execution of both pools. Thus the total transaction fee amounts to 2 x $0.55 = $1.10.

The transaction fee depends very much on the number and complexity of the involved smart contracts and on the fee policy voted on by coin holders.

All transaction fees are paid in HYDRA coins, which is also how stakers receive them.

Block Rewards - Minted HYDRA

The transactional economy is not the only source of income for stakers. As a second layer of revenue, the chain is rewarding block validators with newly minted (inflation based) HYDRA coins.

This means that even in the case of 0 transactions on-chain, stakers will still be able to rely on an attractive APY.

The inflation rate can be voted on by coin holders through the Decentralized Governance Protocol (DGP).

How does it work in practice? The inflation rate is determined by the GDP votes and translates to corresponding block rewards. Right now the average block time is 128 seconds, which means that the expected number of blocks per year is 250,000.

Assuming an inflation rate of 20%, this would translate into 20% of the current supply being minted over the course of 250,000 blocks. Below is a quick example:

  1. Total supply: 18,500,000 HYDRA

  2. HYDRA to be minted: 18,500,000 * 0.2 = 3,700,000 HYDRA

  3. Minted per block: 3,700,000 / 250,000 = 14.8 HYDRA per Block

Inflation will be set to 20% at launch.

How does this impact your staking yield? Let's explore three different scenarios:

Scenario #1
Scenario #2
Scenario #3
Scenario #1
  • Inflation rate: 20%

  • Share of Total Supply Staked: 50%

This combination would yield an APY of 40%.

Scenario #2
  • Inflation Rate: 15%

  • Share of Total Supply Staked: 30%

This combination would yield an APY of 50%.

Scenario #3
  • Inflation Rate: 20%

  • Share of Total Supply Staked: 25%

This combination would yield an APY of 80%.

These fixed block rewards are in addition to the rewards coming from the transactional economy.

The transactional economy yields you an USD-based income stream, which will become more dominant during high transactional activity and low HYDRA price. The inflation based rewards on the other hand yield you a HYDRA-based income stream, which becomes more dominant during low transactional activity and high coin valuations.

The two income streams complement each other and ensure that stakers always enjoy an attractive APY.

You can simulate various scenarios in the staking calculator below: