Crypto’s staking yield: an uncorrelated return building block for the long-term investor?

Key Takeaways

The majority of news headlines are dedicated to changes in the price of cryptocurrencies such as Bitcoin and Ethereum. 2025 showcased a breathtaking rally in digital assets, followed by an even more abrupt correction, leaving Bitcoin as low as 50% below its all-time high¹.

What often gets lost beneath the noise is that an additional source of return is accumulating in cryptocurrencies such as Ethereum and Solana: the staking yield, a systematic reward paid to participants in the digital asset ecosystem. Recently, Ethereum’s annualised staking yield has been around 2.7%, compared to 6% for Solana². Staking rewards are paid in digital currency. For example, if you stake 1 ether (ETH) for a year, you would expect to have around 1.03 ETH at the end of the period.

Figure 1: The impact of staking yield on Ethereum total returns

Source: Bloomberg Finance L.P. from 3 October 2022 to 15 April 2026. Ethereum total return is the Compass Ethereum Total Return Index. Ethereum price return is the Bloomberg Ethereum Index. Staking yield is the Compass Staking Yield Reference Index Ethereum. Historical performance is not an indication of future performance, and any investments may go down in value.

Figure 1 illustrates the impact of earning Ethereum staking yield over time. Although the price of Ethereum has been volatile over the past five years, with pronounced peaks and troughs, the compounding effect of staking yield is evident in the widening gap between total return and price return. The total return fully includes staking rewards, while the price return omits them. Similar to dividend-paying stocks, where distributions explain an increasing part of investment outcomes over longer time horizons, the cumulative return from staking yield will account for a growing share of the total return of an investment in Ethereum over time.

We note that the above chart displays a total return based on earning the full staking yield, which, in reality, is often not practicable. We return to this point later.

Staking yield complements traditional yield sources

Identifying and combining independent sources of return is the goal of a multi-asset portfolio. As bonds provided little protection in stress periods such as 2022 and early 2026, investors are increasingly looking for independent sources of return. To assess whether the staking yield is independent of traditional yield sources, we plot the annualised Ethereum staking yield alongside the expected return (yield to maturity) of global bond indices, as well as alongside a proxy for the expected return from global equities, the earnings yield, which is the inverse of the price-earnings ratio.

Figure 2: Comparing return drivers across asset classes

Source: Bloomberg Finance L.P. from 3 October 2022 to 15 April 2026. Ethereum staking yield is the Compass Staking Yield Reference Index Ethereum. Equity earnings yield is the index earnings yield of the Solactive GBS Developed Markets Large & Mid Cap USD Index. Government bond yield is the index yield to maturity of the Bloomberg Global Agg Treasuries Total Return Index. Investment-grade credit yield is the index yield to maturity of the Bloomberg Global Aggregate Credit Total Return Index. Historical performance is not an indication of future performance, and any investments may go down in value.

Seeing Ethereum’s staking yield alongside bond yields and equity earnings yields (Figure 2), we observe its differentiated characteristics. Although lower and at similar levels to government bond yields, we can visually confirm that it remains present when bond or equity yields are compressed.

Expressed in statistical terms, we observe that the yields of Ethereum and Solana staking exhibit a low and, in the case of Solana, negative correlation with the expected return from global equities, as well as a negative relationship with bond yields (Table 1). This suggests that staking yield can complement traditional yield sources and can help diversify a multi-asset portfolio.

Table 1: Correlation of changes in yield across asset classes

Source: WisdomTree, Bloomberg Finance L.P. from 3 October 2022 to 15 April 2026. Ethereum staking yield is the Compass Staking Yield Reference Index Ethereum. Solana staking yield is the Compass Staking Yield Reference Index Solana. Equity earnings yield is the index earnings yield of the Solactive GBS Developed Markets Large & Mid Cap USD Index. Government bond yield is the index yield to maturity of the Bloomberg Global Agg Treasuries Total Return Index. Investment-grade credit yield is the index yield to maturity of the Bloomberg Global Aggregate Credit Total Return Index. Historical performance is not an indication of future performance, and any investments may go down in value.

Where does staking yield come from and what are the limitations?

Having established the potential of staking yield as a return building block for a multi-asset portfolio, we want to dive deeper into the source of this yield and the limitations that need to be considered.

At its core, staking yield is earned for validating transactions and securing the network, with rewards paid in newly issued tokens as well as transaction fees. The rewards are directly linked to network activity and participation, rather than to leverage or credit risk.

However, accessing this yield involves trade-offs. Directly earning staking yield yourself requires infrastructure, technical expertise and continuous uptime, making it impractical for most investors. Staking also introduces risks such as lock-up periods, as the staked cryptocurrency is not immediately available for withdrawal.

A more practicable alternative is to access staking through physical crypto exchange-traded products (ETPs) that integrate staking. Here, the ETP issuer organises the staking process so that the staking reward accumulates in the ETP’s net asset value (NAV). A caveat is that only a portion of assets is typically staked to maintain sufficient liquidity, resulting in utilisation rates below 100%, while service fees further reduce the realised yield.

Innovative solutions, such as Lido’s staked ether, tokenise Ethereum together with its continuous participation in staking, allowing investors to capture staking rewards while maintaining liquidity. The realised yield is typically closer to the underlying staking rate, although still subject to protocol fees and market conditions. An exchange-traded product (ETP) that wraps the Lido staked ether token in an accessible format has also been introduced.

Summary: an uncorrelated building block

Staking yield accumulates over time within the crypto asset, adding a second component of return beyond price appreciation. At the same time, assets such as Ethereum or Solana remain volatile in the short term, as illustrated by the current drawdown phase.

Over longer time horizons, however, the composition of returns can become more predictable. Similar to dividend-paying equities, where distributions account for an increasing share of total returns, staking yield is likely to explain a growing portion of investment outcomes in crypto assets.

Importantly, staking introduces a distinct return driver. It complements equity earnings yields and bond yields, providing diversification within a multi-asset portfolio.

In practice, the realised staking yield is often lower than what is theoretically possible. Not all assets are staked at all times, as some liquidity needs to be maintained, and service fees further reduce the yield that ultimately accrues to investors.

Despite this, staking-enabled ETPs can still deliver stronger after-fee performance than holding the underlying coin alone, as the accumulated staking rewards can more than offset the associated cost drag over time. Over time, staking rewards are likely to become a more stable and persistent component of total return, reducing the reliance on pure price appreciation.

Staking rewards are not guaranteed and may fluctuate over time depending on network conditions, protocol rules and validator participation. Crypto assets remain volatile and investors may lose some or all of their investment. Investments linked to digital assets are exposed to risks including market risk, liquidity risk, technology and protocol risk, cyber risk, regulatory uncertainty and custody risk. Staking may also involve lock-up periods, validator penalties and operational risks that could reduce returns or result in losses.

¹ Source: Bloomberg Finance L.P. Bitcoin exceeded $125,000 on 6th October 2025 and fell below $63,100 on 5th February 2026.
² Source: Bloomberg Finance L.P., Compass as of 15 April 2026.