Are Crypto Staking Rewards Losing Their Allure?

A noteworthy shift has taken place in the cryptocurrency sector today.

Analyst Ignas, known for expertise in decentralized finance, revealed that the staked tokens of EigenLayer ( EIGEN ) have surpassed its available circulating supply. This development reduces the allure of staking rewards and may impede the growth of altcoin prices.

Current data indicates that approximately 2.42 billion EIGEN tokens are staked, whereas only 1.86 billion are actively circulating. This difference arises because investors can stake their “locked” tokens, meaning those not currently traded in the market contribute to the staking pool.

Additionally, the high volume of staked tokens compared to the circulating supply results in diminished annual percentage yield (APY) rates. When APY is lower, new investors may lose interest in acquiring the asset for staking, further complicating efforts to boost the altcoin’s market value.

These dynamics are essential for grasping the mechanics of staking within the cryptocurrency ecosystem. Although users pursue passive income through staking, the rewards can become less enticing when a significant portion of coins is locked, thereby restricting potential price increases.