Staking yield

A rate paid to holders who commit a digital asset to some function the protocol needs, quoted in the visual language of interest.

Example

A rate of 8.00% paid only to the 60% of supply that is committed grows supply by 4.80% - the committed share rises from 1.000% to 1.0305% and the uncommitted falls to 0.9542%.

Important

The number tells you nothing until you know its source. Borrower interest and user fees are external income; new issuance is a transfer between holders; and payments funded by later depositors are a fraud.

Related terms

• Token issuance — New units of a digital asset created by the protocol itself and distributed under its own rules.
• Dilution — The reduction in your percentage ownership of a company when it issues new shares to someone else.
• Digital asset — An entry on a shared ledger, transferable by whoever holds the private key controlling it. Unlike every other instrument in this curriculum it is not a claim on an issuer, a company or a borrower.
• Speculation — Putting money at risk on an outcome you cannot analyse with any real confidence, hoping for a large payoff.

Lessons that explain it

• No coupon, no rent, no earnings: the next buyer is the return — There is no income here by default and no cash flow to discount. Where a protocol does pay a yield, the useful question is not how much - it is where the money comes from, and sometimes the honest answer is other holders. (11 min)

All 578 terms in the Investing glossary