The third quarter of 2023 marked a noteworthy surge in cryptocurrency staking activities. A few networks spearheaded this movement, while others showcased superior staking yields. It all sets a competitive stage in the crypto realm. Amidst this, Aptos and Sui became the most staked altcoins, gauged by the share of circulating supply locked in.
The spotlight turned towards the average stake rate, a metric defining the portion of tokens from the circulating supply engaged in staking within a particular crypto network. An intriguing study revealed that the average stake rate for the cream of the crop, the top 35 stakable altcoins, soared to an unprecedented 52.4% in Q3 2023. That represented a leap from 49.3% in the preceding quarter, representing growing investor confidence.
Staking is a process where users contribute to the functioning of a Proof-of-Stake (PoS) blockchain by locking up a specified sum of coins. This mechanism garners praise for bolstering network security and thwarting nefarious activities. A higher stake rate amplifies the network’s resilience against potential adversarial onslaughts.
The recent quarter saw Aptos and Sui leading the pack with a staggering 84.1% and 80.5% of their supply staked, respectively. Mina, Solana, and Cosmos were hot on their heels, solidifying their stances in the staking domain. This surge in stake rate mirrors an enriched understanding and readiness among holders to back their networks.
Nonetheless, a climbing stake rate could trim the average return if network activity remains stagnant. That is due to a broader pool of validators divvying the staking rewards. Despite the upbeat stake rates, Q3 reported a marginal dip in the average staking yield, down by 0.4% to 10.2%. This trend traces back to March 2022, when the average yield peaked at 15.4%.
Among the top 10 cryptos by market cap, Polkadot, and Cosmos emerged as the yield kings, offering yields surpassing 7.5%. Ethereum witnessed a surge in staking activities, seizing a 79% slice of the PoS pie. However, a migration of transaction activities from Ethereum’s mainnet to assorted layer-2 networks triggered a Q3 staking yield of a mere 4.5%. That marks a new low for Ethereum.
The quarter also observed a 3% uptick in the overall value of staked altcoins, hitting $73.5 billion. Contrarily, the annualized rewards for stakers dropped, falling to $4.1 billion. This 7% quarter-over-quarter and 18% year-over-year decrease highlighted the evolving staking reward dynamics.
Furthermore, the market cap of the leading PoS altcoins contracted by 7% to $254 billion. Despite the quarterly shrinkage, the year-over-year comparison unveils a robust market. Cryptos marked a 10% to 40% uptick, sidestepping stablecoins and hinting at a buoyant market scenario.
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