On Oct. 28, a report was published by Binance Research that highlights the largest 10 crypto assets supporting or deemed to support- staking represents a cumulative market capitalization of $25.8 billion.
As of press time, this means prospective staking dominance stands at roughly 10% of the total industry market capitalization.
An Investment Strategy
Staking is specific to Proof-of-Stake (PoS) blockchains while allowing network participants to passively earn a form of “interest” by depositing their tokens to both maintain the network and potentially earn rewards.
Nodes in a PoS network are engaged in validating blocks rather than mining them as opposed to Proof-of-Work (PoW) blockchains like Bitcoin. The algorithm selects block validators based on the number of tokens a given node has staked in their wallet-i.e. deposited as collateral in order to complete the addition of the next block to the chain.
Excluding Ethereum, the cumulative staking market capitalization, as of Oct. 24, is worth around $11.2 billion — $6.4 billion of which is staked.
Lock-Ups and Liquidity
Binance data indicates that 43% of tokens are staked vs. 57% in free circulation across all blockchains.
Some chains might allow users to “un-stake” their coins instantaneously while forfeiting any unclaimed rewards, others may entail a mandatory lock-up period that renders funds illiquid and could lead to missed active investment opportunities.
Ethereum 2.0 validators can reportedly expect to earn from 4.6% to 10.3% as rewards for staking on an annual basis.
To become a validator, participants are required to hold a minimum of 32 Ether (ETH) — worth $5,952 by press time. The transition to Ethereum 2.0 is currently slated for January 2020.
Source: Cointelegraph| Binance Research