Simple rewards apply only to the amount you first locked. Compound rewards also apply to rewards already earned. Over a short term the gap is small. Repeat the same rate and the gap becomes visible.
A one-year figure
Take 1,000 POL at 20% a year, as an illustration only. Simple rewards pay 200 POL. Daily compounding of the same annual rate lands near 221 POL, about 21 POL more. Over a single year the gap is real and not dramatic.
Restaking repeats it
If you lock the principal and the reward again at maturity, the next period starts from a larger base. Three years of the same rate widens the gap versus collecting 200 POL each year and setting it aside. The source of the effect is the number of repetitions, not a higher advertised rate.
What the number does not guarantee
The arithmetic above counts coins. Price is not in it. 221 POL can still be a fiat loss if the POL price falls far enough in between. Do not read a compounding example as a promised return.
- Keep the comparison in coin units.
- Write today's fiat price and a maturity price on separate lines.
- Restaking is a new lock. The coins are tied up again for that term.
When compounding barely matters
On a 15 or 30 day term, or when you plan to withdraw and spend at maturity, simple versus compound rarely changes the decision. The maturity date and the deposit network matter more than the reward formula.
