The reason a return paid in the same token is barely a return

A pool paid its staking reward in the same token that was staked, and depositors watched their token count climb, calling it yield. But the reward came from new issuance of that token, and every staker received it, so the supply grew while each holder’s share grew in lockstep. The number of tokens rose; the fraction of the network each token represented fell. Being paid in what you already hold, from thin air, moves the count and not the value.

What everyone sees

A staker sees the token balance increasing and reads earnings: more tokens means more wealth, the way more dollars in a savings account means more money. The rising count is concrete and satisfying. The staker treats each new token as added value, without noticing that the tokens are newly printed and handed to everyone, so the pie has more slices but is not larger.

What is actually happening

When a reward is paid in the same asset via inflation, it is closer to a stock split than to income: total supply rises, and in the absence of new external demand, per-token value falls proportionally. Token-economics research treats self-denominated inflationary rewards as largely nominal — the staker’s share of the network is roughly unchanged, and the real return is only the difference between his reward and the dilution he suffers from everyone else’s.

Why it stays hidden

The hidden mechanism is the confusion of unit count with value. The reward is real in tokens and hollow in worth, because it is minted and universal. By paying in the staked token itself, the pool produces a rising number that reads as profit while the dilution that offsets it is invisible, spread across the whole supply and never shown beside the reward.