By staking Ethereum (ETH), investors have yet another potential income stream to consider in the rapidly expanding cryptocurrency landscape.
As the leading Proof of Stake crypto, the Ethereum Network has the highest staking market capitalization in the whole space. Accruing for a total of $44.56 billion in ETH locked by validators, by press time.
The creation of new tokens (block subsidy) and transaction fees reward investors when they stake their tokens to secure the Ethereum blockchain. Similar to what happens with Bitcoin (BTC) mining. Nevertheless, the supply inflation resulting from these rewards can also impact the real reward rate for Ethereum investors.
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This happens because the increased circulating supply also dilutes the ETH holder‘s true value. Finbold demonstrated this dilution in a previous report analyzing the price Ethereum would trade at if it hits its all-time high market cap.
Ethereum staking reward rate vs. real reward rate
In this context, Finbold retrieved data from StakingRewards.com to discover how much Ethereum staking investors are being really rewarded after locking up their capital with ETH. By looking at the raw numbers, the network has paid $1.55 billion dollars year-over-year.
Notably, despite having an estimated annual reward rate of 3.47%, the real reward rate (adjusted by Ethereum’s supply inflation) is 3% per year. This means that a staking position of 32 ETH ($51,200) would reward a validator around $1,536 yearly.
Nevertheless, it is also important to say that staking Ethereum gives investors one of the closest real reward rates to the annualized expected reward rate among other staked cryptocurrencies.
At the time of publication, there were a total of 863,550 validators staking 27.73 million ETH. However, the staked tokens dropped 65.59% in the last 24 hours.
