Apply commission to rewards, not principal
Gross annual rewards equal principal × gross APR. Commission cost equals gross rewards × commission rate. Net annual rewards equal gross rewards × (1 − commission rate) − fixed annual cost. Net yield equals net annual rewards ÷ principal × 100. Principal must be positive for a meaningful yield percentage. A 10% commission means 10% of modeled rewards is deducted; it does not subtract ten percentage points from gross APR.
Work through a net-reward example
For a hypothetical principal of 50,000 tokens and 6% gross APR, annual gross rewards are 3,000 tokens. A 10% reward commission costs 300 tokens, leaving 2,700 before other expenses. Fixed annual costs equivalent to 200 tokens reduce net rewards to 2,500 tokens, producing a 5% net yield. If the same fixed cost applied to a smaller principal, its percentage impact would increase even with unchanged APR and commission.
Check the reward and cost denomination
Express principal, rewards, and fixed costs in the same token unit used by the form. If rewards are earned in tokens while costs are paid in cash, changing token prices will alter the comparison. The model omits compounding, slashing, downtime, reward variability, entry fees, and exit delays. Net rewards can be negative when fixed costs exceed rewards after commission. That result describes the supplied annual budget rather than a forecast of a validator's future performance.