Ethereum Staking Rewards Plunge To New Lows: Is It Still Worth It To Stake Your ETH?

One of the greatest pulls toward Ethereum staking over the years has been the mouthwatering APY. Stakers were being rewarded handsomely for committing their ETH tokens to help secure the network, prompting a rapid rise in the percentage of ETH supply staked. However, there has been a sharp decline in the APY which has raised the question of whether it is still worth it to stake ETH.

Ethereum Staking APY Falls To 3.5%

In an interesting turn of events, the yearly APY that is being paid to Ethereum stakers has dropped to 3.5%. This was the case on the last reward day which took place on Sunday, October 15, and as the BeaconChain website points out, stakers are now receiving 3.502% rewards per annum.

This is a far cry from the 18% per annum that was recorded back in 2020 when the Ethereum staking first began. Since then, there has been somewhat of a constant decline in the yearly rewards being paid to stakers, although there have been points where the rewards have surged.

Source: BeaconChain

For example, on the May 5, 2023 reward day, staking rewards were sitting at 8.617% per annum with 4,229 ETH paid out to stakers. However, the yearly rewards have had no success in reaching this level again with declines being the order of the day.

The Sunday figures represent an almost 60% drop from its May figures. On a much shorter timeframe, the ETH staking rewards are down 10% in October alone, after starting out the month with a yearly APY of 3.89%. Additionally, total staking rewards for Sunday came out to 2,645 ETH, compared to 2,855 ETH at the start of the month.

Is It Still Profitable To Stake ETH?

Staking ETH to become a validator on the Ethereum network does not require high-computational machines like Bitcoin. As such, the overhead costs to actually become a validator on the network is little to none, especially with liquid staking protocols making it much easier for users.

So despite the diminished APY, it is still profitable to stake ETH. This is because users are able to earn extra ETH on top of their staked ETH which they are now able to withdraw when they need. Also, even at a 3.5% APY, it is still higher than the baseline interest for most banks around the world.

However, there is also the fact that the price of ETH might fall while a user has their ETH staked, which should be something to think about before staking. This drop could mean the ETH may be worth less than they did when they went in. One instance of this is those who staked their coins in 2021 when the price of ETH was above $4,000. By withdrawing and selling now, they would be selling at a loss, even when the yearly APY is factored in.

ETH price fails to hold $1,600 | Source: ETHUSD on Tradingview.com

Featured image from iStock, chart from Tradingview.com