More tokens, lower rewards
Crypto investors are staking more tokens even as rewards decline. Bitwise’s Q4 staking report shows Ethereum has 43.8 million ETH staked, or 35.9% of total supply. That is the highest amount in its history, according to Kam Benbrik, head of onchain research at Bitwise. Solana’s active stake reached 440.5 million SOL. Yet gross annualized staking yields fell on both networks.
The gap matters. Staking locks tokens to help validate transactions and secure a blockchain. For holders, it can increase token balances. But lower yields raise a simple question: why commit more if payouts are smaller?
Countercyclical demand
John Zettler, senior director of product at Payward Services, said staking tends to be countercyclical. In weaker markets, buy-and-hold behavior rises. That can push more tokens into staking and pressure yields lower. Bull markets can reverse some of that. Higher transaction fees may lift rewards, while investors who want liquidity may stake less, which can support yields.
Access is another factor. A Coinbase spokesperson said staking ETFs and digital asset treasuries are widening the door. Retail and institutional investors appear to be looking at staking as a long-term part of holding crypto, not just a short-term trade. Zettler added that clients usually stake assets they already own. Asset selection and custody come first. Staking often comes after those decisions.
Institutions ask about implementation
Ethereum’s longer operating history has helped, Zettler said. Institutional talks now focus more on execution. Kean Gilbert, head of institutional relations at Lido Ecosystem Foundation, said clients want to discuss validator set diversity, code audits, and how much of a fund is actually staked.
Falling validator counts on Ethereum need context. An upgrade lets operators consolidate multiple validators into larger balances. Fewer validators do not automatically mean fewer independent businesses.
For investors, better access and liquidity could keep participation growing even as rewards fall. Gilbert expects staking to become a routine part of holding ether. In five years, he said, people may wonder why anyone held unstaked ETH. That may sound confident. But the trend is already visible in the data.
