Staking Yield

Staking yield is one of the most fundamental income sources in crypto, but understanding its composition — inflationary vs. real yield — is essential for evaluating it properly.

**Sources of staking yield:**

**Issuance (inflationary):** New tokens created and distributed to stakers. This dilutes non-stakers proportionally. If the protocol issues 5% new tokens annually and distributes them to stakers, stakers get 5% APY but the token supply grows 5% — purchasing power is roughly preserved, not created.

**Transaction fees:** Fees paid by users for network usage, distributed to validators. This is genuine 'real yield' — value created by economic activity, not token printing. Ethereum's fee burn (EIP-1559) and distribution to validators means high-usage periods generate real fee income.

**MEV (for validators):** Ongoing extraction of MEV by validators/block builders. For Ethereum validators using MEV-Boost, MEV can add 1–5% additional APY beyond base staking rewards.

**Staking yield by chain (approximate 2024–2026):** - Ethereum: 3–4% base + MEV boost - Solana: 6–8% (higher issuance, lower market cap) - Cosmos Hub (ATOM): 8–15% (highly variable with participation rate) - Cardano (ADA): 4–5% - Avalanche (AVAX): 7–9%

**Liquid staking vs. direct staking:** Liquid staking (stETH, cbETH) allows staking without locking funds, at the cost of a small protocol fee (Lido: 10% of rewards). The yield is lower but capital remains liquid for DeFi use.

**The real yield question:** For staking yield to preserve purchasing power, the token must not depreciate from other factors (inflation, bear markets) faster than the yield accumulates. A 10% staking APY on a token that falls 50% in a bear market is a net loss of ~44%.