Today, there was a remarkable development in the cryptocurrency world. Popular cryptocurrency and decentralized finance analyst Ignasstated that more than the circulating amount of EigenLayer (EIGEN) has been staked. While this reduces the attractiveness of staking rewards for users, it prevents the value of the altcoin from increasing.
Stake Amount for EIGEN Coin Exceeds Circulation Amount
According to data, there are currently a total of 2.42 billion units. EIGEN The coin is staked in the network. However, the amount of EIGEN coins in circulation is only 1.86 billion. So what is the reason for this difference? This is because investors can also stake their “locked” coins. In other words, coins that are not yet active in the market and not in circulation can also be included in the staking process.
Ignas, this situation is just EIGEN coin is not limited to, TIA He stated that a similar problem was experienced in other altcoin projects such as coin. In other words, when some investors include their locked coins or tokens in the staking process, it reduces the rewards that other users can receive and negatively affects the natural functioning of the market.
When APY is Low, Purchases Decrease
On the other hand stake The fact that the amount of coins issued is more than the circulation also reduces the annual interest yield (APY) rates. The lower the APY, the less interest new investors have in purchasing and staking that asset. As a result, this situation is relevant altcoinIt makes it difficult for the market value of to increase.
Such situations are the reason why staking cryptocurrency It is very important to understand how it works in the world. While users want to earn passive income by staking coins, in some systems the rewards are not attractive enough due to locked coins, and this is a significant obstacle to value increases.
Disclaimer: The information contained in this article does not constitute investment advice. Investors should be aware that crypto currencies carry high volatility and therefore risk, and should carry out their transactions in line with their own research.
