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1/ Something major is happening in crypto that is being overlooked by traditional finance 
One of the most consequential currencies, Ether (ETH), is about to become a yielding instrument with annual returns of up to 20%
Thread
One of the most consequential currencies, Ether (ETH), is about to become a yielding instrument with annual returns of up to 20%
Thread
2/ Later this year, Ethereum upgrades to staking and ~$26 billion of ETH tokens will immediately become yield generating instruments. How?
3/ In crypto, miners typically validate transactions and get a token as a reward. This is bitcoinâs model.
In staking, miners are replaced by stakers who put up ETH as capital, validate transactions and thus earn a token reward on that capital. This is *yield* on capital
In staking, miners are replaced by stakers who put up ETH as capital, validate transactions and thus earn a token reward on that capital. This is *yield* on capital
4/ This is a lot for traditional finance to process. Theyâre just getting used to bitcoin. But you canât stake your bitcoin. You can only hold (ahem, hodl) them.
Bitcoin is like gold â itâs not a productive asset
Bitcoin is like gold â itâs not a productive asset
5/ Warren Buffett famously said heâd prefer all the farmland in the US instead of all the gold in the world. Why?
Farmland is a productive asset on which you can earn cash flow. Cash is king. Understandably, Buffett doesnât value bitcoin either
Farmland is a productive asset on which you can earn cash flow. Cash is king. Understandably, Buffett doesnât value bitcoin either
6/ With staking, however, you can turn your cryptocurrency into a productive asset that generates a yield. You can make cash off your holdings.
Youâre now holding farmland
not gold 
Youâre now holding farmland
not gold
7/ Iâve done some work on what yield you can expect on Ethereum post-staking (h/t @Consensys).
In the early days, when itâs more risky to stake, the yield could get into double digits â as high as 20% per year⊠pretty good!
In the early days, when itâs more risky to stake, the yield could get into double digits â as high as 20% per year⊠pretty good!
8/ As staking becomes more prevalent, yields could drop to 2-3%. Not exactly 
, but better than the negative yield on your bank account.
And if yields are low, lots of Ether will be locked up in staking; we might expect a higher market price of Ether and capital appreciation
, but better than the negative yield on your bank account.And if yields are low, lots of Ether will be locked up in staking; we might expect a higher market price of Ether and capital appreciation
9/ With staking as blockchainâs answer to a yield instrument, itâs just a matter of time before staking networks like Ethereum get the attention they deserve from traditional finance
10/ When bitcoin went live, few could have imagined the price would be a mainstay in CNBCâs ticker tape. Yet, here we are.
Similarly, maybe weâre not that far away from CNBC comparing staking yields to yields in treasuries, bonds and dividend stocks?
Similarly, maybe weâre not that far away from CNBC comparing staking yields to yields in treasuries, bonds and dividend stocks?
11/ People should start paying attention. Doing a little bit of homework on this exciting asset class could literally pay dividends! 
/fin
/fin
