April 05, 2024
By Anjali Kochhar
As the S&P 500 experiences fluctuations in dividend payouts, crypto staking rewards are on a remarkable rise, surpassing traditional investment returns by a significant margin.
In recent data, the average crypto staking reward is now 450% higher than the average dividend paid by companies in the S&P 500 index. This trend is notable even as both markets show strong growth.
On March 31, the S&P 500, which tracks major public companies in the United States, saw impressive growth of 10.16% in the first quarter, according to Google Finance. However, its average dividend yield rate dropped to 1.35%, the lowest in over two years.
In contrast, crypto staking involves locking up cryptocurrency holdings to earn rewards, and it currently offers an average annual return of 6.08%, based on data from Staking Rewards.
Looking at individual companies, the three largest in the S&P 500 have varying dividend yields: Microsoft leads with 0.71%, followed by Apple at 0.56%, and Nvidia Corp at 0.02%.
Among the top 100 cryptocurrencies, Algorand (ALGO) offers the highest staking reward rate at 84.19%, followed by Cosmos (ATOM) at 17.17% and Filecoin (FIL) at 16.34%.
However, it’s important to note that high-yield staking comes with risks, as assets are often locked up, limiting the ability to sell them even if their value declines.
Institutional investors are taking notice of this substantial difference between crypto staking rewards and traditional dividends. Grayscale Investments, for instance, recently launched an investment fund tailored for sophisticated clients to tap into income generated from staking crypto tokens.
The fund includes proof-of-stake-based tokens like Osmosis (OSMO), Solana’s SOL, and Polkadot’s DOT, among others, with Grayscale also seeking SEC approval to stake Ether (ETH) as part of its Ethereum ETF fund.
This shift in investment strategies reflects a growing interest in crypto staking as a lucrative alternative to traditional dividend-based investments, signalling a broader trend in the financial landscape.
About the author
Anjali Kochhar covers cryptocurrency stories in India as well as globally. Having been in the field of media and journalism for over three years now, she has developed a sharp news sense and works hard to present information that goes beyond the obvious. She is an avid reader and loves writing on a wide range of subjects.
