Auto-Compounding

Auto-Compounding is an automated strategy that reinvests staking rewards, increasing overall yield through the power of compound interest. Instead of manually withdrawing and restaking earned rewards, the system automatically capitalizes profits, making the process more efficient and profitable.

This mechanism is particularly beneficial for long-term investors looking to maximize returns without active management.

🟠 How Auto-Compounding Works?

Auto-Compounding allows users to automatically reinvest earned rewards, leading to exponential growth in yield over time.

Process Workflow:

1. Staking an asset – The user deposits an asset into staking.

2. Reward accumulation – The system periodically calculates earned rewards.

3. Automatic reinvestment – Rewards are automatically added to the principal staking balance.

4. Increased yield – Each new reward is calculated based on the newly compounded amount, creating the compound interest effect.

🟠 Benefits of Auto-Compounding on FlowDex

• Automated reinvestment boosts returns compared to manual claiming and restaking.

• Users don’t need to manually claim and reinvest rewards—the system handles everything.

• Since rewards are automatically reinvested, users save on transaction fees that would be incurred with manual operations.

• Each reinvested reward increases the principal, accelerating capital growth over time.