Staking yields compress as institutions arrive
More institutional capital staking means lower nominal yields. We explain why net yield after operational cost is the number that matters now.
As the staked share of supply rises, per-validator rewards fall. That is the design working as intended, not a problem. The problem is allocators comparing headline yields from two years ago with what is available now and concluding the trade is broken.
Net yield is the real number
After validator operations, custody, slashing insurance and tax treatment, the spread between a well-run staking program and a poorly run one is wider than the drop in nominal yield.
- Operational cost per validator, not per dollar staked
- Exit queue length under stress
- Slashing history and client diversity
- Whether rewards are custodied on the same platform as principal
Our stance
We keep staking as a yield sleeve, sized so that a forced unbonding period never affects our ability to meet a redemption. Liquidity comes before the last few basis points of yield.