Staking has become one of the most popular ways for Australians to earn passive income on crypto, but the headline APY number rarely tells the full story. Compounding frequency, lock-up periods, and validator fees all change what you actually take home.

APY (annual percentage yield) includes compounding, while APR (annual percentage rate) does not. A 10% APR compounded daily is worth about 10.52% APY — a gap that matters a lot on large positions held for years.

Before you stake, run the numbers: enter your principal, the quoted APY, and your time horizon. Then stress-test it — what happens if the rate drops 2%? What if you unstake early and pay a penalty?

Australian tax rules treat staking rewards as income at the time you receive them, so keep records of every payout. A calculator helps you project, but a spreadsheet of actual rewards keeps the ATO happy.