ghostgregory I thought the same thing, so I put it to the test in a spreadsheet. Someone correct me if I am wrong about something.
First, understand that the current index is the amount of OHM you would have if you started with 1 OHM when it was first launched. From what I can tell, the current index is increased at the same rate as the ROI (5-day rate). If the current index is 49.2, and the current ROI is 5.6026% (indicating my next reward yield is .3640%), then the current index after the next reward yield should be 49.379.
Six percent is six percent (yes, I rounded up on the ROI), regardless of how much OHM you have. What we are used to seeing is this: I have 6 OHM and make 6%, I will have 6.36 OHM.. If you have 60 OHM, you would have 63.6 OHM. earning another 6% compounding brings us to 6.74 and 67.416 respectively.
To keep the math simple, let's assume the market price of OHM is 100 dollars. That means the current value of gOHM at the current index of 49.2 is 4920 dollars. Under the old system, if I have 6 OHM, my portfolio is worth 600 dollars. If you have 60 ohm, your portfolio is worth 6000 dollars.
600 plus 6% = 636 dollars
6000 plus 6% = 6360 dollars
Another six percent compounding looks like this:
636 plus 6% = 674.16
6360 plus 6% = 6741.6
Under the new system I would own about .122gOHM and you would own about 1.22 gOHM.
.122 x 100 dollars x 49.2 = 600.24 dollars
1.22 x 100 dollars x 49.2 = 6002.40 dollars
Now increase your index by 6%: (49.2*1.06 = 52.152)
.122 x 100 dollars x 52.152 = 636.25
1.22 x 100 dollars x 52.152 = 6362.54
Compound 6% again (52.152 x 1.06 = 55.28112)
.122 x 100 x 55.28112 = 674.43
1.22 x 100 x 55.28112 = 6744.29
Compare these numbers to the calculations above under "old system". They are within dollars of each other, and the only true reason they are not exactly the same is my loose calculations.
Botton line: You are still earning compounding interest, not simple interest, making it exponential, not linear.
Finally, while your gOHM balance is not changing, the value of your holdings are. If you were to unwrap and unstake, the number of regular OHM you would receive would be much higher than your gOHM balance.
