Electrum For Mac. Ethereum 2.0 Staking Rewards - Can the yearly ETH 2.0 Staking Reward drop to 1%? S

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Published Feb 5, 2020

Ethereum 2.0 Staking Rewards - Can the yearly ETH 2.0 Staking Reward drop to 1%? Subscriber Question

In this video you will learn more about Ethereum 2.0 staking rewards. Can the yearly staking reward drop to 1%

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In this video you will learn more about Ethereum 2.0 staking rewards. Can the yearly staking reward drop to 1%

This is a video response to a fantastic question that Raes DF asked me on my previous video:

Hey I was looking into purchasing 32 Ethereums. Will the yearly yield ever decline? Let’s assume the yearly yield is 5%. Can the yearly yield ever drop to 1%?

What a great question. Thanks again for asking.

Let's start with an overview which will help you visualize the relation between the amount of ETH staked, the max annual ETH issuance, network inflation and the annual reward rate for validators.

As you can see the highest annual staking reward rate for validators is at 18%, when 1 million ETH is staked. The lowest staking reward is at 1.81% when 100 million ETH is staked.
The inflation is a sliding scale based on the Total Staked. So if the total amount of staked ETH is low, then the max annual issuance of ETH is also low but the max annual reward rate for validators is a lot higher.

To answer your question, Raes, in the unlikely case that 100 million Ethereum gets locked up, the staking reward for validators is still at 1.81%.

Which to be honest still quite good roi when hedging for inflation.
In my opinion It is highly unlikely that more than 90% of the total circulating supply of Ethereum gets locked up through staking. However, should it happen then this will have a very positive impact on the price of ETH. This means that the more ETH is locked in staking the less ETh is available to be bought. With less supply and a high demand the price of ETH will increase.