Calculations for Validator Execution Layer APR

Since Stakehouse is a protocol on the execution layer, it attempts to maintain a shadow ledger of validator balances using registry smart contracts. This is achieved by keeping a track of the balance reports on the execution layer. Balance reports help sync a validator’s execution layer balance with its qualified effective balance on the consensus layer. This ensures proper minting and slashing of the validator’s derivative tokens.

Validator APR is calculated based on earnings from the smart contract directly using the following formula:

$$Validator\ Execution\ Layer\ APR= \frac{dETH\ Rewards\ As\ Per\ Last\ Balance\ Report}{Epochs\ Between\ Activation\ Epoch\ And\ Last\ Balance\ Reporting\ Epoch}\ *\ \frac{Epochs\ In\ A\ Year}{24}\ *\ 100$$

This ensures the APR effectively remains constant between any two balance reporting.