{"id":232675,"date":"2022-04-17T18:00:17","date_gmt":"2022-04-17T17:00:17","guid":{"rendered":"https:\/\/cryptoslate.com\/?p=232675"},"modified":"2022-07-24T23:47:38","modified_gmt":"2022-07-24T22:47:38","slug":"ethereum-post-merge-staking-rewards-will-likely-be-lower-than-anticipated","status":"publish","type":"post","link":"https:\/\/cryptoslate.com\/ethereum-post-merge-staking-rewards-will-likely-be-lower-than-anticipated\/","title":{"rendered":"Ethereum post-merge staking rewards will likely be lower than anticipated"},"content":{"rendered":"

Ethereum\u2019s(ETH<\/a>) transition from a proof-of-work (PoW<\/a>) to a proof-of-stake (PoS<\/a>) consensus mechanism \u2014 the so-called Merge \u2014 will not happen in June as many have <\/span>predicted<\/span><\/a>. <\/span><\/p>\n

As <\/span>reported<\/span><\/a> by CryptoSlate<\/em> on April 14, Ethereum core developers will not yet be ready for the merge before the end of the third quarter.\u00a0<\/span>The highly-anticipated merge will mark Ethereum\u2019s transition to PoS, minimizing its energy consumption and making the network more secure and profitable to stake in. <\/span><\/p>\n

Staking is one of the most awaited features of the post-merge Ethereum network.\u00a0<\/span><\/p>\n

According to IntoTheBlock, initial estimates claimed staking would give users between 12% and 15% in rewards. However, it seems like the percentage will be far lower after the Merge.<\/span><\/p>\n

Significantly lower post-merge staking yields<\/strong><\/h2>\n

However, according to a <\/span>blog post<\/span><\/a> by InteTheBlock, conditions have since changed, with on-chain metrics pointing to significantly lower staking yields once the merge takes place.<\/span><\/p>\n

As of today, over 11.5 million ETH is staked \u2014 and locked \u2014 in the beacon chain staking contract, with the amount of staked ether continuing to grow as stakers anticipate not only the current reward rate of approximately 5-7% but especially the projected future 12-15% reward rate.<\/span><\/p>\n

The amount of ETH locked represents approximately 9.5% of the entire circulating supply. According to IntoTheBlock, in dollar terms, the growth can be appreciated with the value staked nearing all-time highs despite ETH's market price being down 37% since its all-time high from the beginning of November 2021.<\/span><\/p>\n

Staking has accelerated since the launch of stETH<\/strong><\/h2>\n

This growth of staked ether has accelerated since the launch of stETH, a staking derivative token used as collateral on the <\/span>Aave<\/span><\/a> lending protocol. Unfortunately, the rise in staked ETH causes rewards to decrease proportionally. <\/span><\/p>\n

In other words, the more ether staked, the fewer rewards per staked ether. <\/span><\/p>\n

In a sense, ether staking is a victim of its success. With the merge delayed \u201c<\/span>a few months<\/span><\/a>,\u201d it likely means that the amount of ETH staked will grow even further, resulting in lower yields.<\/span><\/p>\n

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It won't be June, but likely in the few months after. No firm date yet, but we're definitely in the final chapter of PoW on Ethereum<\/p>\n

— Tim Beiko | timbeiko.eth \ud83d\udd25\ud83e\uddf1 (@TimBeiko) April 12, 2022<\/a><\/p><\/blockquote>\n