finbold.com
Staking cryptocurrencies can be done in different ways, using different networks, and for different goals. However, they all have one thing in common: Staking tokens will recurrently reward their holders for a proportional share of each of their stakes on the network or application.
This happens because investors trade their liquidity — by locking their tokens under specific rules set by the protocol they are staking at — for the right to directly participate in the system, which can be as validators of a Proof of Stake (PoS) consensus, a protocol’s governance or even by providing liquidity to a decentralized exchange, a lending platform, or to a collateralized asset. Moreover, liquidity has a cost, that is translated into the so-called ‘passive income’.
Interestingly, Artificial Intelligence (AI) text generators such as the ChatGPT, developed by OpenAI, can be valuable allies when gathering complex pieces of information quickly, which can help find financial opportunities or filter top projects among thousands.
In this context, Finbold asked ChatGPT-4 on October 7 to “name thee cryptocurrencies to stake.” Of which, the AI pointed to Ethereum (ETH), Tezos (XTZ), and Cardano (ADA) — as the most “commonly staked by holders to earn rewards”, in the artificial intelligence words.
Ethereum (ETH)
“Ethereum is one of the largest and most well-known cryptocurrencies. It uses a Proof of Stake (PoS) consensus mechanism, and its transition to Ethereum 2.0 has made staking possible. ETH holders can participate in the network’s security and governance by staking their tokens and earning rewards.”
— ChatGPT-4
According to data retrieved by Finbold from StakingRewards.com, staking ETH to become an Ethereum validator is paying around 3.71% per year over the staked amount. This website also calculates the ‘real reward rate’, adjusted for the token’s inflation long-term, which is 3.34% yearly for Ethereum.
Notably, there is a total of $44.57 billion staked on Ethereum at the time of publication, which equals 22.15% of ETH’s market cap of $200.74 billion. In the last 24 hours, there was a surge of close to 14% in the amount of staked tokens in the network.
Tezos (XTZ)
“Tezos is a blockchain platform that uses a PoS consensus mechanism. XTZ holders can stake their tokens and participate in the network’s governance while earning staking rewards. Tezos is known for its on-chain governance and the ability for token holders to vote on protocol upgrades.”
— ChatGPT-4
By staking XTZ, investors are expected to earn a yearly rate of 5.18% over the staked amount, in the current state of the network. Nevertheless, the ‘real reward rate’ calculated by StakingRewards.com shows that the yield is actually 0.92% after discounting the token inflation.
Meanwhile, Tezos holders have been unstaking their tokens by 17.17% in the last 24 hours. It is also important to note that despite having a market cap of $644.87 million by press time, 71.79% of that accrues for staked XTZ, for a total staked value of $476.16 million.
Cardano (ADA)
“Cardano is another popular cryptocurrency that uses a PoS consensus mechanism. ADA holders can stake their tokens in the Cardano network and participate in the process of block validation and creation. Staking ADA allows participants to earn rewards.”
— ChatGPT-4
As of October 7, the Cardano network is rewarding close to 3% per year to its stakers, also according to StakingRewards.com data gathered by Finbold. This represents the lower yield among these three picks by ChatGPT-4, which gets even lower when adjusted with ADA’s token inflation, for an expected reward of 0.39% in the long run.
With a staking market cap of $6.08 billion in ADA, Cardano stakeholders represent a share of 63.32% of the total market cap for its native token. At the time of publication, the staking trend is also negative, like Tezos, with a 12.9% outflow.
Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.