Crypto Staking Demand Grows as Ethereum and Solana Yields Keep Falling

More investors are locking up tokens to secure blockchains, even though the rewards are shrinking. Bitwise says Ethereum now has 43.8 million ETH staked, about 35.9% of supply, the most in its history. Solana’s active stake reached 440.5 million SOL. Yet gross yields dropped on both networks, with Ethereum averaging 2.63% in the third quarter, down from 2.81%, and Solana slipping to about 6% from 6.38%.

Why Investors Keep Staking

Executives say staking is becoming a normal part of holding crypto. Kraken parent Payward’s John Zettler noted that weak markets tend to push people toward buy and hold, which lifts staking and squeezes yields. Staking ETFs, treasury companies and custodians have also made access easier, and Lido’s Kean Gilbert said institutions now ask about validator diversity, code audits and how much of a fund is actually staked.

Where the Rewards Come From

Ethereum saw net inflows of 1.99 million ETH, its sixth straight positive quarter. Issuance supplies 96.3% of its yield, and transaction fee income fell 40.2% from the prior quarter despite transactions rising 35.3%. Almost 90% of Solana’s yield also comes from issuance. Zettler expects Ethereum yields to keep sliding.

The Liquidity Challenge

Unstaking ETH can take weeks, so funds often hold some back. Gilbert estimates European products are only 50% to 60% staked. Liquid staking tokens, such as WisdomTree’s stETH based product, help meet redemptions.