Thank you for your response...the comments
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The period they will actually stake is random, but irrelevant because the reward uses coin age. But the incentive to keep your wallet open and generating POS (and therefore securing the network and moving transactions) is that the more frequent they stake, though you get a smaller reward in each interval, the interest will be compounded more often. "
makes things a whole lot clearer. Basically coins become eligible for stake. By random they will actually stake. (However the age of ALL coins are always kept on record.) They go into stake section. The stake amount then is eligible for interest at 1% pa. After maturing they are removed from stake section and placed back in your balance. You continue to collect interest on those coins[and any others now over 8hrs old at 1%pa. Eventually all of your eligible balance will stake so that you can started to be PAID OUT interest on them.
IMPORTANT: Even if they dont stake quickly a record of coin age is kept so that the correct interest can be paid out at stake time. Of course the effect becomes compounded over time especially if you 1) Keep your wallet open 2) Stake often[somewhat due to luck] i.e if you stake often then more interest is paid on interest[compounded effect]
Again, It is important to note that interest is calculated based on the age of your coins so even if you only stake once a year then you would only truly receive 1% pa.
Interest only starts to be actually paid out when you stake, though you will be paid out on said interest for every coin held over 8hrs . However if you stake 1/wk the compounding effect could be significant.
I think I finally get it. Like I said the compounding is the easy part but the procedures involved in POS interest payments are overly complicated for a newbie. Even some Wall Street derivatives have easier payment mechanisms
p.s
I am expecting A steep price rise ala AURcoin as soon as we hit block 9500
quote author=artiface link=topic=469640.msg5433540#msg5433540 date=1393619862]
Compound interest is the easy part. Lets see if some one can explain using a practical numerical example.
1) I have a 100,000 BC balance
2) I am lucky[ fulfilling the 8hrs, unlocked reqmt, etc] and get a stake of 10,000 BC
To keep thing,s simple I get no further stake for weeks.
Explain using said numbers what happens to that 10000 BC incl. interest collected, over the period of the stake. Is the period of the stake random as well ?
to get you started 1% pa of 10000 BC is 100 BC per year or 0.28 BC/day in interest.
From the source:
int64 nSubsidy = nCoinAge * COIN_YEAR_REWARD * 33 / (365 * 33 + 8 );
nCoinAge is days. For the age of your coin you get 1% * coinage / days in a year.
So to put in numbers.
You have 100,000 coins that are all 8 hours old and generate a stake. You get 100000 * .01 * .33 / 365 = 0.904109.
You now have 100000.904109
Next time you wait 5 days before you generate a stake.
100000.904109 * .01 * 5 / 365 = 13.69875
Now you have 100014.602859
Next time you wait 90 days
100014.602859 * .01 * 90 / 365 = 246 .611348
Now you have 100261.214207
Next time you wait the rest of the year
100261.214207 * 0.01 * 269.66 /365 = 740.724356
Now you have 101001.938563
Or just a bit over 1% annually.
This will always come out to a bit over 1% annually because the coin age continues to grow until the coins stake. The period they will actually stake is random, but irrelevant because the reward uses coin age. But the incentive to keep your wallet open and generating POS (and therefore securing the network and moving transactions) is that the more frequent they stake, though you get a smaller reward in each interval, the interest will be compounded more often.
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