According to Bitwise data, the amount of Ethereum staked hit a record 43.8 million ETH, while the annualized gross staking yield fell to 2.63% in the third quarter.
Investors are staking more tokens on Ethereum and Solana to contribute to the networks’ security, despite declining yields. Bitwise data cited by CoinDesk shows that the 43.8 million ETH staked on Ethereum represents 35.9% of the total supply, while the amount of SOL actively staked on Solana rose to 440.5 million SOL.
Staking allows investors to earn rewards by making their tokens available to validate transactions and secure a network. But as participation grows, rewards may be shared across a larger pool of capital, putting pressure on returns per investor.
How much staking yield did Ethereum and Solana provide?
Ethereum’s average annualized gross staking yield in the third quarter fell to 2.63% from 2.81% in the previous quarter. Solana’s rate also declined, from 6.38% to about 6%. These rates show yields before service-provider fees.
Ethereum recorded a net inflow of 1.99 million ETH staked during the quarter, marking a sixth consecutive quarter of net inflows. Bitwise cited institutional participation, including growing positions held by treasury companies such as Bitmine, among the factors contributing to the increase.
Most rewards don’t come from transaction fees
New ETH issuance accounted for 96.3% of Ethereum’s gross staking yield. Transaction priority fees and payments related to transaction ordering made up the remainder.
Although the number of transactions on Ethereum rose 35.3% year over year to 199.3 million in the third quarter, network fees and transaction-ordering revenue fell to a daily average of 198 ETH. That was 40.2% below the previous quarter. The expansion of network capacity lowered transaction costs for users but did not lead to a corresponding increase in fee revenue.
On Solana, activity and fees rose, but declining new token issuance and an increase in the amount staked weighed on total yield. Here, too, about 90% of gross staking yield came from token issuance.
Why do institutions keep staking?
John Zettler, Payward Services’ director of product, said investors tend to hold on to their assets more during weak markets, which can increase demand for staking. Institutional clients typically first decide which assets to hold and where to custody them; staking is then considered as a way to earn additional rewards on tokens they already own.
Coinbase also noted that staking ETFs and digital-asset treasuries are broadening access. Custodians’ offering of staking support makes it easier for institutions to participate through their existing service relationships.
Access to funds matters as much as yield
Kean Gilbert, head of institutional relations at the Lido Ecosystem Foundation, said that while funds may need to pay their investors within a day or two, it can take weeks to withdraw ETH from staking. As a result, funds may keep some of their assets out of staking to meet liquidity needs.
Gilbert estimates that an average of 50% to 60% of assets in relevant investment products in Europe are staked. Tokens that represent staked assets and can be traded can also be used to access liquidity without waiting in the withdrawal queue; the terms of a sale depend on market liquidity and price.
Not investment advice.