Secret Network: Delegator Annual ROI Calculation Tutorial (≈25–30%)
If you are anything like me, you want to know how much you are earning and how quickly. The Secret Network is chock full of innovation. Right now is a great time to stake. Let’s take a quick peek at the equation that makes it all happen.
Inflation Rate= 15% (I)
Total SCRT Staked = 34,000,000
Total SCRT Supply = 74,000,000
Foundation Tax = 15% (F)
Secure Secrets’ Commission Rate = 7.5% ©
Community Tax = 2% (T)
Staking Ratio = 34,000,000 / 74,000,000 = 45.9%
Annual ROI = (InflationRate/(TotalSCRTStaked/TotalSCRTSupply))
Or with simplified script:
Annual ROI = (I/Staking Ratio)*(1 — F)*(1 — C)*(1-T)
Annual ROI = (15% / 45.9%) * (1 — .15) * (1 — .075) * ( 1 — .02)
= 25.12% Annual ROI in SCRT
Now, using this 25.12% annual return rate, we can calculate how much SCRT we can own if we stake for a full year with Secure Secrets as our example. If you own 6500 SCRT then as of 9/16/2020 you would earn the following:
Personal wallet SCRT = 6500
Total SCRT after 1 year staked = 6500 + (6500 * .2512)
=6500 + 1,632.8
You now have the tools to be able to calculate your own ROI depending on the validator you choose to delegate to! Returning to the original ROI equation, I like to address numbers and the story behind them whenever I can, so let’s take a look.
The inflation rate of a network is the rate at which new blocks are issued via block rewards. Note that the inflation rate of the Secret Network can change through a governance proposal — for now it is a strong incentive for new validators to join the community. The current inflation rate is approximately 15% for the Secret Network, which is lucrative for validators and delegators alike. Secret Network leverages the same variable inflation rate as Cosmos — using a 7% annualized inflation rate floor. The inflation rate of Secret Network is variable based off of the amount of staked SCRT and total supply, topping out at around 15% annualized inflation versus the traditional 20% of Cosmos.
Total SCRT staked may very in the future once there is market liquidity with exchanges. Currently, according to puzzle by Secret Nodes, approximately 45.9% of the network is staking on the Secret Network. Atom targets 66% staked/total supply ratio by using a variable inflation rate. As a whole, 45.9% is a healthy number that favors early-comers to the Secret ecosystem. The less SCRT staked, the greater the return for a delegator due to the Inflation / Staking Ratio mathematical paradigm. When the total staked decreases, the staking ratio decreases. Because the staking ratio is the denominator of inflation, the smaller the value of the staking ratio, the greater the return generated by inflation.
The Foundation Tax proposal on August 2nd created a module that implements a 15% block reward tax on all blocks. This enables the Secret Foundation to better improve the network by having a pool of funds to allocate to projects that expand the ecosystem. The Community Tax previously was 75%, but was lowered to 2% in July once a base of funds was established. This pool of funds is truly in the communities hands.
Finally, the commission rate depends on your validator of choice. Here at Secure Secrets we are currently using a 7.5% commission rate — a value which allows us to sustainably operate our validator node, while continuing to create content and tools for the community!
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At Secure Secrets, we are passionate about privacy as a human right. We take this seriously, and believe the Secret Network is the key to unlocking the full value and potential of blockchain technology. Watch the video below created by Secure Secrets.
Finally, we would love to have you delegate with Secure Secrets!
Validator Address : secretvaloper1rfnmcuwzf3zn7r025j9zr3ncc7mt9ge56l7se7
Donation : BTC : bc1qrf32mrehryusdszuzxjrcd7nc6sqh5x7hchhrc
SCRT : secret1vfh72k8p556hq9vhv7am6luxuj0mqscm6xx2fx
Thank you for reading, happy staking.