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Kraken’s “State of Staking” Report

Proof-of-Stake Cryptocurrencies took center stage in this year’s third quarter. According to a report titled “State of Staking,” published by US-based crypto exchange Kraken, staked tokens increased from 49.4% in the second quarter to 52.5% between July and September.

For beginners, staking involves committing funds to a particular Proof-of-Stake blockchain in an effort to keep it secured. Those who participate in staking are rewarded with newly minted tokens.

Per Kraken’s report, tokens that were staked the most in the last quarter include Aptos, SUI, Solana, ATOM, and MINA. The exchange’s Product Director, Tim Ogilvie, says stake rates have increased in recent months as token holders are becoming more familiar with how Proof-of-Stake blockchain works and are now willing to commit their funds in those chains to support them.

However, he reveals that if network activity remains the same after stake rates increase, it may lead to low average returns as generated staking rewards have to be distributed among more validators.

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Kraken’s Report Notes a Drop in Staking Yields

The surge in stake rates reduced the average staking yield in the third quarter. Kraken reports that the yield dropped to 10.24% from 10.67% in the previous quarter. Notably, the average yield was 15.3% in 2022’s third quarter. The top 20 assets offering yields above 10% include ATOM (18%) and Polkadot (15.3%).

While not much of ETH was staked in the last quarter, the token has continued to dominate the staking space, accounting for nearly 80% of the staked tokens. Why Ethereum is popular among stakers could be because it is the second-largest crypto asset, with a market cap of $214 billion as of this writing.

Ethereum Continues to Record Low Staking Yields

However, staking yields on Ethereum have been on a downtrend in recent months because of increased stake rates and reduced network activity due to the emergence of layer-2 networks, which facilitate transactions faster than Ethereum.

Meanwhile, the increasing stake rates have boosted the total value of the staked tokens. In the third quarter, the value of all staked cryptocurrencies hit $73.6 billion after growing 3.5% from the previous quarter.

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James Davis

By James Davis

James Davis is a prominent crypto writer and analyst at Herald Sheets, recognized for his well-researched articles and thorough analysis of the dynamic digital currency market. Holding a degree in Economics from Harvard University, James combines his academic background with a keen interest in cryptocurrency to provide readers with the latest industry insights and trends.