Staking Crypto Yields Hit Historic Low as Proof of Stake Networks See Rising Stake Rates – What’s Going On?

cryptonews.com:

As proof of stake networks see a surge in stake rates, a consequent plummet in staking yields is concerning investors and market watchers. According to a third-quarter report from Staked, a subsidiary of the Kraken exchange, the average staking yield for the top 35 stakable cryptocurrencies has dwindled to a record-breaking low. Staking crypto has often been touted as a way to generate passive income, but the declining yields have raised questions about its long-term viability and potential regulatory implications.

The average staking yield across proof of stake networks has sagged to a meager 10.2%, attributed to a rising average stake rate of 52.4% among investors. Ethereum, the largest network that employs proof of stake, displayed a particularly noticeable drop. Its Consensus layer yield sank to 3.2%, and the total supply of staked assets in the network rose to an unprecedented 22%. As for Ethereum’s Execution layer, it plummeted to a mere 1.3%.

“The combination of a high stake rate, and transaction activity shifting from Mainnet (L1) to the various Ethereum Layer 2 networks (L2), resulted in a Q3 staking yield of 4.5%, ETH’s lowest on record,” the report stated.

Staking crypto

is not just a method for investors to earn; it also forms a crucial part of the blockchain ecosystem. Staking enhances the network’s overall security and stability by locking a certain amount of cryptocurrency for a specific period.