Author: Tanay Ved, Matías Andrade Source: Coin Metrics Translation: Shan Oppa, Golden Finance

Key points:

Ethereum’s staked supply is 34.4 million ETH (28% of current supply), while Solana’s active staked supply is 297 million SOL (10% of current supply 51%), this is because the entry barrier for principals is low.

Ethereum has a larger validator set, with 1.07 million validators, while the more hardware-demanding Solana has 5,048 validators, but delegation There are more than 1.21 million people.

Ethereum’s nominal staking yield is 3.08% (2.73% adjusted for inflation), which is the benchmark for on-chain economics. Solana offers a higher yield of 11.5% (actual yield is 12.5%), but delegators earn less than validators due to a different reward structure.

Ethereum’s continued issuance results in an annualized inflation rate of 0.35%, and the burning of EIP-1559 typically results in deflationary periods. Solana follows an era-based inflation plan, with annualized inflation currently at 4.7% and set to stabilize at 1.5%.

Introduction

Ethereum and Solana are the two largest proof-of-stake (PoS) blockchain networks, each using different methods to reach consensus and secure their ecosystems . Both rely on staking, requiring participants to submit their native tokens, ETH or SOL, to validators who play a key role in maintaining the integrity of the network. To incentivize honest participation, stakers can earn staking rewards, aligning their actions with the best interests of the network.

This yield enhances their appeal as cash flow generating assets, serving as a benchmark interest rate in the on-chain economy, similar to U.S. Treasury bonds in traditional finance . In this week’s State of the Network, we look at Coin Metrics’ new staking yield and inflation metrics to understand the staking mechanics and network economics of Ethereum and Solana, and put their staking ecosystem into perspective concretize.

Ethereum staking overview

There are currently 34.4 million ETH staked on the Ethereum network since the introduction of the beacon chain (consensus layer) in December 2020. 28% of ETH’s current supply of 120.4 million is staked (also known as the collateralization ratio), while 72% remains unstaken, held in smart contracts and externally owned accounts. While Ethereum’s staking ratio grew rapidly from 14% to 28% after the Shapella upgrade, the ratio has remained around 28% as staking demand has cooled.

Source: Coin Metrics Network Data Pro

To become a validator on the Ethereum network, participants must contribute 32 ETH as collateral or to a staking pool that manages staking operations Or exchanges offer smaller denominations of ETH. This 32 ETH is also known as the validator's maximum valid balance, which will change to a maximum of 2048 ETH in the upcomingPectraupgrade. Ethereum currently has 1.07 million active validators, a number that is expected to decline as validator integration proceeds.

Ethereum Staking Yield Analysis

Today, ETH’s nominal staking yield is 3.08%, while the real (inflation-adjusted) yield is 2.73%. Ethereum’s base staking yield decreases over time as the amount of ETH staked increases. These rewards come from two main sources and reflect Ethereum’s modular design: Consensus Layer Rewards and Execution Layer Rewards.

Validators are rewarded in the consensus layer for the role they play in securing the network, including attesting and proposing new blocks. These rewards are funded through newly issued ETH, contributing to network inflation and creating a more predictable revenue stream. Execution layer rewards, on the other hand, are tied to changes in block space requirements, including priority fees and Maximum Extractable Value (MEV). During periods of increased activity, such as increased demand for block space in March, actual staking APY surged to 6.2% and exceeded 5% on August 5, 2024, thanks to higher priority fees and therefore the execution layer award.

Source: Coin Metrics Network Data Pro

ETH pledge yield as the on-chain benchmark interest rate

Staking yield can be evaluated on a nominalor real (inflation-adjusted) basis to evaluate the reward for participating in the Ethereum consensus process. This helps stakers or investors understand their returns. Real rate of return and comparing it to holding uncollateralized ETH For comparison. More broadly, the ETH staking yield is the benchmark rate for the on-chain economy, similar to the reference to U.S. Treasury yields in traditional finance. It provides a way to compare risk-free rates and staking yields. opportunities in the on-chain and off-chain ecosystems

Source: Coin Metrics Network Data Pro

This staking yield may further enhance the appeal of ETH in investment vehicles such as ETFs, as loosening regulations may pave the way for staking-based Ethereum ETFs with ETH staking yields. Rate also underpins several DeFi primitives, such as liquid staking tokens as collateral for returns, as well as stablecoins such as Ethena's USDe and re-staking ecosystems such as EigenLayer.

Source: Coin Metrics Network Data Pro

< p style="text-align: left;">There is a close interplay between Ethereum's economic design and staking incentives, which are affected by network activity, transaction fees, and ETH inflation rates. The more network activity on -2, the higher the transaction fees, which results in more ETH going through The EIP-1559 mechanism is burned, resulting in a deflationary period. When the amount burned exceeds the issuance, the inflation-adjusted yield becomes more attractive. Ethereum's current daily inflation rate is 0.00096%, annualized. is 0.35% because the issuance amount is slightly higher than the destruction amount Solana Staking Overview

Solana uses the "Delegated Proof of Stake" (DPoS) consensus mechanism. This allows validators and delegators (SOL holders who contribute equity to the validator) to stake SOL. These tokens together constitute the validator's "stake" ”, which determines their influence in the consensus process and their ability to verify blocks.

Unlike Ethereum, Solana There is no minimum balance requirement to participate in staking. This low threshold makes the staking rate relatively high at 51%. Of the current 589 million SOL supply, 297 million SOL are actively pledged to receive rewards in the most recent period. of validators and delegators, excluding those who do not receive rewards or exit before the end of the period

Source: Coin Metrics Network Data Pro

So, there are 1.22 million on Solana stakers, of which 1.21 million are delegators. However, the number of validators is much smaller at 5048. This is likely due to the high-performance infrastructure and large amount of SOL required to run Solana validators. Staking. The network uses a leader-based consensus process where individual validators are assigned to process blocks according to a rotation schedule, ensuring that validators with more stakes have greater influence. /p>

Source: Coin Metrics Network Data Pro< /em>

Solana inflation and staking yield dynamics

Solana uses an inflation model to distribute staking rewards, issuing SOL once every epoch (approximately 2-3 days). This results in a "fluctuation" in new issuance in 2021 in the chart below. The initial inflation rate is 8% and is expected to decrease by 15% annually, currently 4.7%.

Staking income mainly comes from inflation rewards distributed according to this plan, supplemented by Take 50% of base fees, all priority fees, and MEV. It’s also worth noting that 92% of staking on Solana.The Jito validator client is used, which provides additional off-protocol economic incentives to validators through tips. While Solana has also seen growth in liquidity staking on protocols like Jito and Marinade, their adoption rates are still lower compared to Ethereum.

Source: Coin Metrics Network Data Pro

Solana’s nominal staking APY is currently 11.5%, while the actual (inflation-adjusted) APY is 12.5%. Those yields have risen recently due to a surge in priority fees in November as Solana network activity increased. As shown in the chart below, delegators have a low yield (currently around 6.7) and only receive rewards from new issuances, while validators benefit from issuances, fees, commissions charged to delegators, and their own staked SOL. This structure highlights the additional incentives for running validators, which incur higher operating costs in favor of validators with the largest stakes.

Source: Coin Metrics Network Data Pro

Conclusion

The staking mechanisms of Ethereum and Solana reflect their different design philosophies. Ethereum’s modular architecture separates execution and consensus, while Solana’s delegated proof-of-stake (DPoS) model integrates these capabilities with high-performance infrastructure. This results in Solana having a lower number of validators but a higher staking rate due to a lower barrier to entry for delegators. As the Ethereum and Solana networks mature, their staking ecosystems and economic models will continue to evolve, shaping network usage, issuance, and staking returns to meet the growing needs of their ecosystems.