Karla Barker 
More crypto holders are locking tokens to secure blockchains, even as the rewards for doing so get smaller. That mix raises questions about why investors stake and what they actually earn.
More stake, lower yields
Ethereum now has 43.8 million ETH staked, or 35.9% of total supply, according to Kam Benbrik, head of onchain research at Bitwise. That is the highest amount in the network’s history. Solana’s active stake reached 440.5 million SOL, Bitwise’s Q4 staking report said. But gross annualized staking yields fell on both networks. The gap raises a simple question: if rewards are shrinking, why is participation still rising?
Staking means committing tokens to help validate transactions and secure a blockchain. For people who already hold the asset, it can add to token balances over time. Access has also improved. A Coinbase spokesperson said staking ETFs and digital asset treasuries are widening the pool of investors who can take part. Retail and institutional buyers, the spokesperson said, are looking at the long-term benefits rather than reacting to short-term price moves.
Countercyclical demand
Demand may not follow the usual market mood. John Zettler, senior director of product at Payward Services, the business-to-business arm of Kraken parent Payward, said staking tends to be countercyclical. In weaker markets, more investors buy and hold, which can push more tokens into staking and put downward pressure on yields. Bull markets can work the other way. Higher transaction fees can raise rewards, while a desire for liquidity can keep some holders out of staking and lift yields.
There is also a structural shift. Zettler said clients usually stake assets they already own. Investment and custody decisions come first, and staking is an additional service considered later. Ethereum’s longer operating history has helped build comfort, he added.
Institutions ask about implementation
Institutional interest is moving past whether to stake at all, according to Kean Gilbert, head of institutional relations at Lido Foundation. He said institutions want to talk strategy: how diversified the validator set is, who audits the code, and how much of a fund is actually staked.
Ethereum’s falling validator count needs context. An upgrade lets operators consolidate multiple validators into larger balances. Fewer validators, then, do not automatically mean fewer independent businesses. For investors, better access and liquidity could keep drawing in participants even if rewards decline. Gilbert expects staking to become a routine part of holding ether. In five years, he said, people may wonder why anyone held unstaked ETH.