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RE: Is Staking Sustainable? Insights on the Hottest Crypto Trend.

in Project HOPE5 years ago

Staking is an interesting concept and getting the reward rate right is going to be tricky. To encourage staking, we need a rate that is attractive as otherwise, it would be safer to use DeFi to earn income on a stable coin.

If the stake reward is too high then this can cause a devaluation of the price of the coin as more coins flood into the market. Buring coins is one way to balance this so that you have a degree of liquidity and stop the devaluation of the coin.

However, to make staking long term profitable the coins also need a degree of stability, which will hopefully come one day with higher market caps. At the moment whales in the market can destroy any value very quickly.

I am personally optimistic for Ethereum 2 with a higher market cap, a relatively low inflation rate. Staking itself takes liquidity out of the market and that will put upwards pressure on the price.