Love the article. Though it might be problematic to circumvent the forward looking earnings yield. Contrary to earnings growth, higher staking % reduces staking yield, and as such 'making' ETH a less desirable asset? In addition, what would be a healthy spread between the 'crypto risk free rate aka eth' vs. real world over night fed fund rate? The 'higher for longer' narrative seems to make longer tail assets less attractive if yield spread diminishes over time...
Thanks! A higher staking rate does reduce the staking rewards, but that doesn't necessarily make ETH less attractive investment. There are two things counteracting forces 1) a higher stake rate makes Ethereum more secure, which increases its SOV thesis and 2) if transactions fees grow they could offset the declining staking rewards, which means validators would earn more of their total yield from transaction fees (eg earnings) than staking rewards. Note in the table above I outline the 4 drivers of total staking yield, staking rewards is only one part of the total income earned.
A wider spread between Eth staking at ~6% and US ~4% on the US 2 year treasury would also be helpful as you point out.
Love the article. Though it might be problematic to circumvent the forward looking earnings yield. Contrary to earnings growth, higher staking % reduces staking yield, and as such 'making' ETH a less desirable asset? In addition, what would be a healthy spread between the 'crypto risk free rate aka eth' vs. real world over night fed fund rate? The 'higher for longer' narrative seems to make longer tail assets less attractive if yield spread diminishes over time...
Thanks! A higher staking rate does reduce the staking rewards, but that doesn't necessarily make ETH less attractive investment. There are two things counteracting forces 1) a higher stake rate makes Ethereum more secure, which increases its SOV thesis and 2) if transactions fees grow they could offset the declining staking rewards, which means validators would earn more of their total yield from transaction fees (eg earnings) than staking rewards. Note in the table above I outline the 4 drivers of total staking yield, staking rewards is only one part of the total income earned.
A wider spread between Eth staking at ~6% and US ~4% on the US 2 year treasury would also be helpful as you point out.