Ethereum Staking Yields Fall Behind Other Layer-1 Protocols.
According to a recent report by Kaiko, Ethereum 's staking yields are falling short compared to returns offered by other Layer-1 protocols such as Cosmos, Polkadot, Celestia, and Solana. This situation may partially diminish Ethereum's appeal as the second-largest cryptocurrency.
Decline in Staking Yields.
The returns generated from capital invested in Ethereum staking are lower than those offered by other Layer-1 projects. While protocols like Cosmos, Polkadot, Celestia, and Solana provide staking yields ranging from 7% to 21%, Ethereum's staking yield remains at a mere 2.9%.
The Kaiko report states, "Currently, Ethereum's staking yield lags behind the returns offered by other popular Layer-1 protocols."
Decrease in Validator Demand.
The validator queue had an average waiting time of 45 days in June 2023, but by 2024, this duration has dropped to less than one day. This trend indicates a decline in demand for Ethereum. According to experts, reduced staking incentives and competition from other blockchains significantly affect this drop.
10X Research remarked, "Traditional financial interest rates considerably overshadow ETH staking yields," evaluating the decrease in demand for Ethereum staking.
Ethereum's Strength in Decentralized Finance.
The importance of Ethereum in the decentralized finance sector is also highlighted in a new report by Ark Invest. The report emphasizes that Ethereum continues to be a cornerstone for decentralized finance. Ark Invest stated, "Like Bitcoin, Ethereum holds a significant place in the digital asset ecosystem."
If Trump wins the U.S. presidential election, U.S. Treasury yields are expected to continue exceeding Ethereum's yields, which may exert pressure on ETH prices.
The decline in Ethereum's staking yields and demand may shift investors' attention to alternative opportunities. However, its strong position in decentralized finance enables it to maintain long-term potential. These factors could still make Ethereum an attractive option for certain investors.
