Ethereum Staking Yield May Plummet Following The Merge

Based on predictions, on-chain metrics have shown that Ethereum (ETH) staking yield may plummet below expectations following The Merge. 

Specifically, there is an ongoing misconception that the yield from Ethereum staking which would be paid out after the transition from the Proof-of-work (PoW) to the Proof-of-stake (PoS) would be as high as 12% or 15%. 

At the same time, the data available on staking and network usage currently are bound to produce a lower yield. Presently, the staking yield rate is around 5-7%. 

With the projection of about a 12% yield rate, many stakers have locked in an enormous amount of ETH. In April, the amount of staked ether in the Beacon Chain staking contract reached about 12 million. 

At the present time, the ether stake is approximately 13.5 million, an 11.3% percentage of the entire circulating supply.

Amount of Staked Ethereum Affects Yield

This is in no way a limitation to the yield as there is a possibility that it could reach a higher estimate depending on the burn amount and the network flowing in and out. 

However, in the short term, the estimated yield value can only be lower unless there is a spike in market activity. It has been discovered that the amount of ETH staked is a key factor in determining the level of staking yield which will be earned post-Merge.

Unfortunately, the higher the amount of staked ETH, the lower the amount of yield received per staked ETH. Other factors which are responsible for controlling the amount of staking yield are the Ethereum gas fee paid by users and the percentage of the fees which was used. 

Although the launch of the new Ethereum protocol is already scheduled for a few days from now, if it is further delayed and the amount if staked ether increases, there is bound to be a much lower yielding rate. 

As the countdown for The Merge draws closer, stakers and crypto players’ interest is increasing tremendously. According to Sam Padilla, a blockchain developer for Google Cloud, Google Search engine now displays a countdown clock for the highly-anticipated Ethereum’s The Merge. There is a further projection by Google that during the few days following the Merge, more interest will be recorded.