Ethereum staking rewards hit an all time low but there may be a solution in sight

Ethereum [ETH] staking rewards have not been something to look forward to despite the 6% increase since the Merge. According to a recent Messari tweet, ETH inflation had fallen to almost zero, which had affected the possibilities of increased rewards. 

However, that was not the only reason. The crypto intelligence platform further noted that the underperforming Maximum Extractable Value (MEV)-boost also contributed to the decline. This was because the MEV enabled validators to earn high rewards. In turn, helping stakers to gain more value.

Staking returns have not been as significant as expected because of lower-than-expected MEV and tips in this bear market.

The increase in real returns from 0% to 6% is much more tangible, as $ETH inflation has fallen to near zero from 4%. pic.twitter.com/wImj1cqyKp

— Messari (@MessariCrypto) October 23, 2022

Here’s AMBCrypto’s Price Prediction for Ethereum [ETH] for 2022-2023

Respite soon or…

On the brighter side, it seemed that validators were rarely affected by the MEV decline. This was because Transparency Flashbots showed that ETH paid to them as a result of maintaining the MEV-boost relay was increasing. At press time, the ETH sum paid to validators was 919.45 ETH. Compared to 21 October, which was 596.16 ETH.

Source: Transparency Flashbots

Additionally, the blocks proposed percentage had remained constant at 100%. However, the reducing  block reward for the average prosper might call for concern. According to the smart contracts-transparency report, the proposer block rewards 0.029. With the rate, staking rewards’ likelihood of revival was bleak.

Transparency Flashbots

With staking becoming less profitable, it had translated to reduced staking deposits. According to Glassnode, the ETH staking deposits figure stood at 826 at press time. The number dropped 1,088 on 18 October. This meant that there was less staking and validation, leading to less participants involved in securing the ETH network. 

As a result, there had been few missed blocks amid an increased validator efficiency. With the participation rate at 99.3%, there was hope that the staking rewards would improve. This projection was due to the active involvement of validators in approving and securing more transactions blocks.

Source: Glassnode

What’s the position for ETH?

As of this writing, ETH was trading at $1,303. CoinMarketCap data showed that the altcoin king had lost 0.12% of its value in the last 24 hours. Also, ETH had lost 20.96% of its volume within the same timeframe, based on data from the price tracking platform. Per its next movement, ETH could remain in favor of bears in the short term. 

This was due to the indications from the Directional Movement Index (DMI). According to the DMI, ETH sellers (red) had a solid edge over the buyers (green). With the sellers holding on to a 27.24 DMI, ETH buyers might need more effort than the 14.69 value to take back control. However, it was not just the sellers that ETH buyers might need to fight off. With the Average Directional Index (ADX) at 31.95, an uptick was looking very unlikely. 

Source: TradingView