Deep Dive: Divi Staking Vaults and rewards

In this article we will be discussing staking rewards, and what to expect when starting your first vault!

Kyle Turnbull

January 10, 2022 · 5 min read

Deep Dive: Staking Vaults and rewards

Deep Dive: Staking Vaults and rewards

Staking Vaults: How rewards work

DIVI is a proof of stake cryptocurrency, that utilizes coin-age and UTXOs. Stakers are the validators of the network and contribute greatly to network security. If you want to understand how staking works in our ecosystem, you can read all about that in the blog below. Important factors to understand are UTXOs and Coin Age, both of which are covered below. 

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However, for the purposes of this blog, we will be discussing staking rewards, and what to expect when starting your first vault! 

Rewards in the DIVI Ecosystem

Before we touch on reward frequency, let’s make sure we all understand what we’re talking about. DIVI block rewards are awarded every time a block is minted. This is to incentivize people to support our decentralized network and keep users secure. At the time of writing, a masternode reward is 450 DIVI, and a staking reward is 380 DIVI. 

There is a very good reason people earn lump-sum rewards, as opposed to incremental earnings every day or week, and it is to do with coin velocity. Early on, we wanted to create an environment where people would keep their DIVI committed for longer periods of time, as opposed to jumping in for a week, earning rewards, and then leaving again. We envisaged a future where people would keep a large chunk of their DIVI set aside for staking, and use a smaller amount for spending. This method contributes greatly to the security of our proof of stake ecosystem, by attracting committed users. 


Let’s start with a definition of stochasticity:

“having a random probability distribution or pattern that may be analysed statistically but may not be predicted precisely”. 

This is incredibly important when it comes to DIVI staking rewards, especially when we are used to thinking in terms of consistent returns on investment. It’s natural to want certainty, and stochasticity doesn’t provide that on small timeframes. Simply put, you should not expect to hit the average ROI every week. We suggest you zoom out and look across a longer timeframe.  

Timing of rewards

On your staking vault dashboard, you will see two numbers, ROI and Average time between rewards. These two numbers are helpful, but one is much more important than the other. 

  • ROI: Over longer timeframes, this will be very very accurate. Over a year, we’d expect you to be very close to this number. 

  • The time between rewards: There is much more variance here, like any average. The ROI is calculated yearly and should be treated with that in mind. 

The blockchain is not interested in how we feel about rewards. It’s following the code, and the rewards will come. It may sometimes feel like a long time between them, but rest assured everything is working as it is meant to. If you are staking small amounts of DIVI, then it may take some time to receive a reward. Just don’t forget, your ROI will remain consistent. It can be a hard idea to wrap your head around, but just remember, you are carrying out a critical service for the blockchain, every single minute!

Our biggest tip: Treat your vault like a savings account

If you are constantly removing funds from your vault, you’re damaging your ROI, as the UTXOs are constantly changing. Vaults work best if you set aside your DIVI, and leave it. This includes the rewards you earn! If you need liquid funds, make sure you keep these out of the vault to maximize your earning potential! Don’t forget, as a staking vault, you’re providing critical network functions. You’re not just a part of a pool, you’re committing to the network and being rewarded for doing so. This requires a little patience and some planning!

If you are still worried about your rewards, first check that your vault is online, and operating as it should. If this is the case, you have nothing to worry about. If your node is inactive, please don’t hesitate to contact our support crew, and we’ll have you up and running in no time. 

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Example: Calculating DIVI staking rewards

The point of this section is to demystify DIVI staking reward frequency. For the sake of clarity and simplicity we will make a couple of assumptions.

Assumption 1: We will assume that the staking reward percentage is locked at 20% annually. Currently 20% is a pretty good estimate for annual DIVI staking rewards. In reality the reward percentage is in constant fluctuation based on the amount of participation in the ecosystem. It should also be noted that DIVI, like Bitcoin, has block reward reductions built into the code; over time the reward percentage will decrease.

Now that we have an assumed annual return percentage we just need a couple more data points: the size of the staking wallet and the size of the staking reward.

Staking reward: As each new block is added to the DIVI blockchain new DIVI is created. These new DIVI go to stakers, masternode holders, the DIVI lottery and the DIVI foundation. DIVI has an annual block reward reduction; once a year the reward amount is slightly reduced. Currently a single staking reward is 380 DIVI.

Assumption 2: We will assume that staking rewards are locked at 380 DIVI.

With our two assumptions in place we have created a hypothetical situation which makes reward estimation quite easy with this simple formula:

[# of DIVI staking] x [annual staking %] = estimated annual DIVI earned

Divide this number by 380 to reveal expected reward instances per year.

Now let’s plug in some numbers. Let’s say we are staking 100,000 DIVI:

100,000 x .2 = 20,000

20,000 / 380 = 52.6 rewards per year

The longer the time frame the more accurate any estimate will be. Weekly estimates will be much less accurate than a monthly estimate. Over the past years, we’ve found that at least a 3-month timeframe is necessary for everyone to hit their ROI! 

Rewards are awarded stochastically; a pseudo-random distribution with a weighted average. Bear in mind, it is technically possible to not receive a single reward for months. It is also possible for a wallet to receive many rewards in one month, and none the next. These examples are unlikely but possible and in each situation, they should over time fall in line with the 20% annual reward over time.

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    Kyle Turnbull

    January 10, 2022 · 5 min read