The allure of Ethereum (ETH) staking has waned as the annualized yield for pledged tokens currently hovers at 3.5%, according to David Lawant of FalconX. This yield falls short of the 5% offered by US government bonds, signifying a shift away from the pandemic-era low-interest rate environment back towards traditional financial assets.
Data from the Validator Queue reveals a notable decrease in the waitlist for validators on the Ethereum network, indicating reduced demand for Ether staking. The number of validators directly affects staking payouts.
While services like Lido and Rocket Pool have made it easier for individuals to access staking rewards, strategists at JPMorgan Chase & Co., including Nikolaos Panigirtzoglou, contend that this surge in accessibility has eroded Ethereum’s yield appeal compared to traditional financial assets.
Other blockchains, such as Solana and Cardano, also employ staking mechanisms. Approximately 72% of Solana’s SOL tokens and 63% of Cardano’s ADA tokens are locked for staking. In contrast, Ethereum’s staking ratio stands at 22.6%. Notably, Bitcoin does not employ a staking system.
Data from the Dune Analytics dashboard, provided by 21Shares AG, illustrates a significant decrease in the amount of Ether staked from May to September, coinciding with a broader digital asset market downturn. Despite Ether’s year-to-date price increase, it lags behind Bitcoin’s rally, which has been fueled by speculation regarding the potential approval of Bitcoin exchange-traded funds in the US.
Kaiko, a digital asset research firm, reported that Ethereum’s price increased by 1% to $1,581, while Bitcoin saw a 1.7% rise to $29,211 on Friday.