Staking rates are to crypto what interest rates are to traditional finance. Ethereum’s transition a year ago to proof-of-stake with “The Merge” was an incredible accomplishment for its ecosystem that delivered obvious enhancements to network security and reduced its energy footprint by 99.95%.
This shift, which made it so validators are rewarded with both protocol emissions and priority transaction fees, also unlocked something perhaps less obvious but absolutely groundbreaking for Ethereum: the introduction of a native interest rate. Staking ether (ETH), the ecosystem’s native token, now pays an interest rate. This forms a sort of bedrock layer – similar to the role interest rates play in traditional finance – that could power a new, küresel staking economy. For this to work, though, there must be a reference rate, so investors know what the benchmark is at any given time – a reliable number derived by observing the mean, annualized returns across a comprehensive validator population.
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A standardized staking rate built on social consensus will serve as a foundational pillar of the crypto economy. It will catalyze new financial instruments and capabilities and unlock a new wave of consumer and institutional adoption.
Here are five reasons why the world needs a standardized staking rate:
Ethereum’s transition to proof-of-stake introduced native interest rates to the ecosystem for the first time. Industry adoption of a standardized benchmark has nearly infinite use cases and will be an important step in the evolution and maturity of crypto markets. Like traditional markets, interest rates can potentially drive crypto native markets forward and unlock a new wave of küresel adoption.