Ethereum staking appears to be the new favorite way for crypto traders to capture yield. But as more stakers rush in and more ether is deposited on the blockchain, the yield gets spread out more thinly. _jocelynyang_ reports
Under the proof-of-stake system, the blockchain’s security – making sure transactions go through as intended and that the cryptocurrency is safe – is provided by “validators” whotheir ether as a sort of guarantee. Becoming a validator or staker requires at least 32 ETH to be locked up on the blockchain.
In other words: The amount of ether staked is in the denominator of the fraction. So as the number gets bigger, the yield shrinks. At the current level, the Ethereum staking yield is roughly on par with that of the 10-year U.S. Treasury note yield, whichThe takeaway is that stakers are apparently content to collect roughly the same yield by sticking their money into the Ethereum blockchain as by investing in triple-A-rated U.S. government bonds, considered among the world’s safest investments.
The staking growth is “a sign that traders find it a reliable alternative to the traditional markets,” Alan Goldberg, market analyst at BestBrokers,“Making a deposit for a year without access to your funds is a risky move, especially if the funds are in crypto," said Goldberg. “However, traders continue to stake... It just proves that many traders feel secure with Ethereum.”
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