The average crypto staking reward is now 450% higher than the average dividend paid to investors in the S&P 500, despite there being strong growth across both markets. 

On March 31, the S&P 500 — the index that tracks the 500 largest public companies in the U.S. — recorded its best first-quarter growth performance in 5 years at 10.16%, per Google Finance data.

However, its average dividend yield rate of 1.35% was the lowest recorded since roughly two and half years prior in Q4 2021. Notably, this represents a difference of 0.23% from the all-time low of 1.12% recorded 24 years ago, during the first quarter of 2000.

Meanwhile, crypto staking — which involves locking up one’s cryptocurrency holdings to earn interest or rewards — currently pays out an annual return average of 6.08%, according to the benchmark reward rate on Staking Rewards.

The S&P 500 dividend yield is the average dividend payout of all the individual stocks within the index. Of the three largest S&P 500 companies, Microsoft recorded the largest dividend yield of 0.71%, followed by Apple with 0.56%, and Nvidia Corp with 0.02%.

Of the top 100 cryptocurrencies, Algorand is currently paying the highest staking reward rate of 84.19%, followed by Cosmos at 17.17% and Filecoin at 16.34%.

However, high-yield staking carries risks since assets are often locked up, meaning that investors may be unable to liquidate even if the value of the underlying were to decline.

Institutional investors are starting to take note of the substantial difference between crypto staking rewards and dividend yields.

On March 30, Cointelegraph reported that Grayscale Investments had launched an investment fund tailored to sophisticated clients — in a bid to expose their portfolios to income generated from staking cryptocurrency tokens.

Grayscale named three PoS tokens that will be held in the fund: Osmosis (OSMO) has a 24% share, Solana has 20%, and Polkadot has 14%, while 43% is categorized under other tokens.

Grayscale is also one of a handful of asset management firms — including Ark Invest and Fidelity Investments — to seek approval from the US SEC to be able to stake ETH as part of its Ethereum ETF fund, should it be approved this year.

Source : Cointelegraph / Apr 3, 2024