Crypto Staking Rewards Surpass S&P 500 Dividends by Whopping 450%
Summary:
Crypto staking now offers a 450% higher reward than dividends from S&P 500 shares, despite both markets growing strongly. While the S&P 500 recorded its best first-quarter growth performance in five years, its dividend yield rate was a low 1.35%. Meanwhile, crypto staking offers an average annual return of 6.08%. Among the top 100 cryptocurrencies, Algorand leads with the highest staking reward rate. Due to these higher yields, institutional investors are becoming interested in crypto staking, with Grayscale Investments launching a fund dedicated to income generated from staking cryptocurrency tokens.
Rewards from cryptocurrency staking now outstrip dividends from S&P 500 shares by an impressive 450%, even though both fields are experiencing significant growth. New data from Google Finance highlights the stellar performance of the S&P 500 on March 31, with the listing of America's top 500 public firms enjoying its best Q1 growth in half a decade at 10.16%. Still, its latest dividend yield rate was a disappointing 1.35%, the least seen in about two-and-a-half years since Q4 of 2021, marking a mere 0.23% increase from the historic low of 1.12% registered 24 years ago in Q1 of 2000.
Concurrently, cryptocurrency staking, the process where crypto assets are stored to earn interest or rewards, is currently yielding an annual return average of 6.08% according to the average reward rate on Staking Rewards.
The S&P 500’s dividend yield represents the combined dividend payouts of all its constituent stocks. From the trio of the biggest S&P 500 companies, Microsoft stood out with the highest dividend yield at 0.71%, while Apple and Nvidia Corp trailed with 0.56% and 0.02% payout rates respectively.
In the crypto realm, Algorand (ALGO) leads with the topmost staking reward rate of 84.19% among the 100 biggest cryptocurrencies. Cosmos (ATOM) and Filecoin (FIL) follow with 17.17% and 16.34% respectively.
High-yield staking isn't without risks, bearing in mind that assets are typically held immobile, preventing investors from liquidating when the underlying value depreciates.
Related: Ethereum Restaking could bring 'concealed risks' — Coinbase
The compelling contrast between the payout from crypto staking and dividend yields has reportedly caught the attention of institutional investors. Cointelegraph disclosed on March 30 that investment company Grayscale Investments had introduced a fund specially designed for well-heeled clients, designed to provide them with exposure to income yielded from staking cryptocurrency tokens.
Aside from the trio of Proof-of-Stake (PoS) tokens— Osmosis (OSMO), Solana (SOL), and Polkadot (DOT) that the fund holds with stakes of 24%, 20%, and 14% respectively, it also manages 43% in other tokens. It's worth noting Grayscale is among the shortlist of asset management firms — Ark Invest and Fidelity Investments included — attempting to get the green light from the US SEC to stake Ethereum as part of its Ethereum ETF fund if given the nod later this year.
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Published At
4/3/2024 9:09:47 AM
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