ETH Staking Falls Short Against 5.17% Treasury Yield
When comparing ETH staking to government-backed Treasury notes, it's clear that staking may not be as competitive in terms of income. The current annual return for ETH staking is around 2.8%, whereas a 10-year Treasury note yields 5.17% in U.S. dollars. This puts stakers at a disadvantage of about 2.4 percentage points, before considering any market price fluctuations.
The value of ETH has dropped significantly over the past year, by 35.2%. A staker who held onto their ETH during this downturn would have essentially collected 2.8% more coins, but each coin is now worth considerably less. In fact, it would take more than 15 years of staking rewards just to recover losses from that 35% drop in value.
On the other hand, Treasury notes offer a fixed return and are backed by the U.S. government. While they don't guarantee the note's market price during its holding period, investors know exactly how much they'll earn at maturity. Additionally, interest from Treasury notes is taxed as ordinary income but exempt from state and local taxes.