Lisk (LSK)
$1.32 (3.80 %) View coin |
Cosmos (ATOM)
$4.07 (2.97 %) View coin |
Dash (DASH)
$87.81 (-0.29 %) View coin |
Tezos (XTZ)
$3.16 (-0.95 %) View coin
News
01 April 2020

Does the percentage of total tokens staked have an impact on price?

Staking has been a trending theme over the last few years. The high-profile launches Cosmos and Tezos, the rise of staking services, and the noise generated by Ethereum’s long-awaited upgrade have all helped drive the narrative that proof-of-stake (PoS) could be the next evolution of consensus mechanisms.

Some investors have acted on this narrative by not only placing bets on specific networks but also staking their holdings in search of inflation rewards (a commonly misunderstood concept). Since staking incentives and token use cases vary across protocols, the total number of tokens staked on a network at any given time can vary as well. But does the percentage of tokens staked have an impact on price?

Our analysis shows the correlation between the percentage of liquid supply stake and price return YTD is fairly weak.

Despite the lack of a definitive trend, all of the staking protocols that have less than 40% of its liquid supply staked are down in price this year. On the other end, the two networks with the highest staking totals experienced the most significant price drops YTD.

Locking up tokens can reduce velocity (the rate at which funds are exchanged), which can have the secondary effect of lessening sell pressure. But the price movements observed here are more closely related to project-specific announcements as well as the general direction of the overall market (which has been decidedly down due to a tumultuous last month). Dash, for instance, announced it is aiming to increase network utility with the upcoming launch of on-chain data contracts. In contrast, Cosmos has dealt with some internal team issues as core contributor Tendermint Inc. shifted company priorities and opted to “part ways” with a few developer teams.

Newsletter
27 July 2020
3 coins to keep an eye on | Issue #88
The past week brought some signs of life to Bitcoin. The price climbed over 11% from its lows to its highs before closing almost 8% higher than the week before. Meanwhile, the altcoin marketcap surged almost 15% alongside Bitcoin from $103 billion to $118 billion by the weekend. While we wait to see if this week brings ...
The Tezos Foundation has announced its fourth cohort of ecosystem grants, issuing funds 18 development teams and projects. This grant program offers financial support to projects building on the Tezos protocol, and this round had a particular focus on teams working to boost smart contract developmen...
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