Sticking with the SOL example from earlier, the Solana development team has released an inflation schedule designed to minimize these concerns and set a long-term inflation rate target of 1.5%. As more people participate in a staking system, the more diluted the value of a single token and the less individuals are rewarded, if there are not strict inflation-control mechanisms. As the crypto market matures and volatility decreases, staking will likely become a more reliable source of revenue.Īn additional concern raised by the report is the inflation inherent to any system that consistently mints new tokens. A worker cleans the exterior of a First Republic bank on Apin San Francisco, California. This is true of any staking cryptocurrency. bank, will be used to settle payments between clients and the lender will then work to transfer cross-border payments or corporate debt. If the value of the SOL token were to tank, there would be no real gains. JPM Coin, the first cryptocurrency created by a major U.S. For example, ethereum competitor Solana lets investors take the native SOL cryptocurrency, currently valued at $32.76, and earn SOL rewards.
However, the potential ability to earn consistent positive yield through staking cryptocurrencies is dependent on market volatility. Ethereum 2.0 was originally supposed to launch in January 2020, and is now expected to enter its final launch phase in 2022. Authors predict that the ability to use crypto assets to earn yield through staking will make digital assets a more attractive asset class and could help to grow mainstream adoption of cryptocurrencies. The current market capitalization of proof-of-stake tokens is over $150 billion, according to the report. “In fact, in the current zero rate environment, we see the yields as an incentive to invest.” “Yield earned through staking can mitigate the opportunity cost of owning cryptocurrencies versus other investments in other asset classes such as US dollars, US Treasuries, or money market funds in which investments generate some positive nominal yield,” the report reads.
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