> For the complete documentation index, see [llms.txt](https://gaya-blockchain.gitbook.io/gaya-blockchain/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://gaya-blockchain.gitbook.io/gaya-blockchain/gayacoin/staking-formula.md).

# Staking Formula

GAYA employs a staking mechanism that dynamically calculates Annual Percentage Yield (APY) to balance rewards and network security. The APY encourages active participation while avoiding excessive inflation.

**Formula for APY Calculation:**

APY (%) = (Annual Reward Pool / Total Tokens Staked)×100

* Annual Reward Pool: Total GayaCoins allocated for staking rewards in a year.
* Total Tokens Staked: Sum of all tokens locked in staking contracts.

**Dynamic Adjustment Factor:**

To maintain balance, the APY adjusts based on staking participation:

Adjusted APY = Base APY × (1− Total Staked Tokens/Circulating Supply)

This ensures lower staking rates yield higher individual returns, incentivizing additional participation.

Example Scenario:

* Annual Reward Pool = 50,000,000 GayaCoins
* Total Tokens Staked = 1,000,000,000 GayaCoins

APY (%) = (50,000,000/1,000,000,000) × 100 = 5%

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