Does Staking ETH Make Sense for an Investor?

Or is it just a public good for the Ethereum ecosystem?

Simply put: Any user with any amount of ETH can help secure the network and earn rewards in the process. Rewards is basically more ETH in ratio to the quantity of ETH staked. Literally a fixed income plan! 

There are a lot of products available in different ecosystems which popularize staking as a fixed-income product. One that compounds over time as the interest gets accrued; mostly on a daily basis.

In most cases, the APY would range from 2% to 15% depending on how highly leveraged the staking is or which platform you’re using.

Since it is a fixed-income product we can safely assume that a year is a bare minimum that anyone would like to invest in or stake in ETH! Now, from an investor’s perspective, whose primary objective is to earn a decent ROI, let’s see how staking in ETH panned out over the past 5 years:

Aug-2017 to Aug-2022

If someone had started in Aug 2017 with 1 ETH and had staked it at a certain interest rate accruing daily, this is how the return would have appeared over the next 5 years.

TimelinePriceETH Staked @6%ROI @6%ETH Staked @12%ROI @12%
Aug 17$33511
Aug 18$3531.06$374.181.13$398.89
Aug 19$1901.13$214.71.27$241.3
Aug 20$3911.2$469.21.43$559.13
Aug 21$29801.27$3784.61.62$4827.6
Aug 22$16081.35$2170.81.82$2926.56

At first glance, ETH Staking may appear like a solid fixed-income plan helping you grow your ETH consistently. E.g. 1 ETH staked @6% p.a would have grown to 1.35 ETH at the end of 5 years.

However, as soon as you start looking at it in Fiat terms, it paints a different picture altogether. A consistent growth in ETH may not always necessarily help in growing the wealth in fiat terms; as witnessed in years 2 & 5 where the actual wealth has decreased significantly over the previous year because of price fluctuations.

Now add to this the real case scenario where investors sign up at different stages throughout the 5-year journey and you would start seeing the bigger picture. Many investors would have fallen out owing to the price fluctuations despite registering a growth in the quantity of ETH. Isn’t it?

ETH has been picked here to just bring out an assertion clarifying the basic understanding of staking while hoping to help our investors taking an informed decision.

For instance, consider this. From the above table it is clear that ETH staking yielded an average of 6X return in fiat terms over 5 years. Whereas it could have easily yielded 14X return with Sypto during the same period.

It pays to weigh your options wisely!