Solana: A Top-Performing Cryptocurrency with High Staking Demand
Solana (SOL) has emerged as one of the best-performing cryptocurrencies in 2023, experiencing a remarkable price increase of over 200% year-to-date. This surge in value can be attributed to the growing demand for SOL, its native token, which investors can stake in exchange for staking rewards.
The Second-Largest Cryptocurrency by Staking Market Cap
According to data from StakingRewards.com, Solana holds the position of the second-largest cryptocurrency by Staking Market Cap. As of October 24, there is a staggering $12.72 billion at stake in Solana’s network, with validators and delegators locking up a total of 400.05 million SOL tokens within the protocol.
Understanding Solana’s Staking Reward Rate vs. Real Reward Rate
The Solana protocol rewards investors who stake their SOL to secure the blockchain by creating new tokens. However, it’s important to note that the resulting supply inflation from these rewards can have an impact on the real reward rate for Solana investors.
In a previous report, Finbold demonstrated how this supply inflation dilutes the true value of SOL. They analyzed the potential trading price of Solana if it were to reach its all-time high market cap.
Realizing the True Reward Rate for Solana Investors
To determine how much Solana’s staking protocol actually rewards its investors after they lock up their capital with SOL, Finbold turned to StakingRewards.com. The data revealed that the network has paid out $905.03 million year-over-year.
Interestingly, despite an estimated annual reward rate of +7.08%, the real reward rate (adjusted for Solana’s supply inflation) is -0.29% per year. This means that a staking position of 1,000 SOL ($30,000) would result in yearly losses of $87.
Comparing Solana’s Real Reward Rate to Other Leading Cryptocurrencies
Solana’s estimated real reward rate is one of the lowest among the leading cryptocurrencies by staking market cap. As a comparison, Ethereum has an estimated real reward rate (adjusted for supply inflation) of +3%, slightly higher than its +3.47% ETH staking reward.
A Growing Number of Stakers Despite Low Reward Rates
Despite the low estimated reward rate that discounts the token’s inflation, the number of crypto wallets staking SOL has increased by 69% in the last 24 hours. Currently, 772,980 crypto wallets are staking approximately 71% of Solana’s market capitalization.
Hot Take: Solana Continues to Thrive Despite Challenging Staking Rewards
Solana’s impressive performance as one of the top-performing cryptocurrencies demonstrates its ability to attract investors despite its challenging staking rewards. The demand for SOL remains strong, and its growing network participation is a testament to its popularity within the crypto community. While the real reward rate may be lower due to supply inflation, Solana continues to thrive as a promising investment option in the cryptocurrency market.
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