Crypto staking rewards are now 450% higher than S&P 500 dividends

The allure of crypto rewards remains strong compared to the average dividends paid out to investors in the S&P 500.
The allure of crypto rewards remains strong compared to the average dividends paid out to investors in the S&P 500.

The average crypto staking reward is now 450% higher than the average dividend paid to investors in the S&P 500 despite strong growth across both markets. 

On March 31, the S&P 500 — the index that tracks the 500-largest public companies in the United States — recorded its best first-quarter growth performance in five years at 10.16%, per Google Finance data.

However, its average dividend yield rate of 1.35% was the lowest recorded since roughly two and half years prior in Q4 2021. Notably, this represents a difference of 0.23% from the all-time low of 1.12% recorded 24 years ago, during the first quarter of 2000.

Meanwhile, crypto staking — which involves locking up one’s cryptocurrency holdings to earn interest or rewards — currently pays out an annual return average of 6.08%, according to the benchmark reward rate on Staking Rewards.

Source: Charlie Bilello

The S&P 500 dividend yield is the average dividend payout of all the individual stocks within the index. Of the three largest S&P 500 companies, Microsoft recorded the largest dividend yield of 0.71%, followed by Apple with 0.56% and Nvidia Corp with 0.02%.

Of the top 100 cryptocurrencies, Algorand (ALGO) is currently paying the highest staking reward rate of 84.19%, followed by Cosmos (ATOM) at 17.17% and Filecoin (FIL) at 16.34%.

However, high-yield staking carries risks since assets are often locked up, meaning that investors may be unable to liquidate even if the value of the underlying asset were to decline.

Related: Restaking could introduce ‘hidden risks’ to Ethereum — Coinbase

Institutional investors are starting to take note of the substantial difference between crypto staking rewards and dividend yields.

On March 30, Cointelegraph reported that Grayscale Investments had launched an investment fund tailored to sophisticated clients — in a bid to expose their portfolios to income generated from staking cryptocurrency tokens.

Grayscale named three proof-of-stake-based tokens that will be held in the fund: Osmosis (OSMO) has a 24% share, Solana’s SOL (SOL) has 20%, and Polkadot’s DOT (DOT) has 14%, while 43% is categorized under other tokens.

Grayscale is also one of a handful of asset management firms — including ARK Invest and Fidelity Investments — to seek approval from the U.S. Securities and Exchange Commission to be able to stake Ether (ETH) as part of its Ethereum ETF fund, should it be approved this year.

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