Staking and Real Yield in Blockchain: Where the APR Comes From

Staking and real yield in blockchain: where the APR comes from

Overview

Where does blockchain yield really come from? In this MERGE Madrid talk, Stakely discusses real income and intrinsic value: how the sector generates sustainable income through staking, what the sources of yield in proof of stake are, and which risks to watch before trusting an attractive APR.

What you'll learn

• Blockchain's intrinsic value: the “giant Excel” analogy that updates worldwide at once
• Proof of work vs proof of stake: electricity versus collateral as a consensus mechanism
• Sources of income: native issuance, network fees, MEV and additional incentives
• What MEV is: front running, sandwich attacks and how they are being mitigated
• Types of staking: native, liquid and restaking, with their benefits and risks
• How to evaluate an APR: where it comes from, sustainability, liquidity and risks

Session summary

Intrinsic value: it explains blockchain's value with the analogy of a “giant Excel” replicated in millions of copies that all update at once every few seconds or minutes depending on the network.

Consensus and incentives: it compares proof of work (high electricity consumption) with proof of stake (collateral that grants the right to create blocks), and how creating a malicious block penalizes the validator.

Sources of income: it details native issuance (inflation), network fees (with Ethereum's burn mechanism), MEV and additional token incentives, stressing that fees are a bigger source than many believe.

MEV: it explains the value validators can extract by ordering transactions (front running, sandwich attacks), how it is largely handled off-chain today and the efforts to mitigate and eventually regulate it.

Types of staking: it distinguishes native staking (programmed into the chain itself), liquid staking (a token representing the position that adds liquidity) and restaking (reusing collateral to secure other networks), each with more smart-contract layers and risk.

How to evaluate yield and risk: it proposes key questions for an attractive APR (where it comes from, whether there is real usage, liquidity and clear exits) and reviews risks such as halted chains, smart-contract hacks and dilution from excessive token issuance; staking is described as “the fixed income of crypto”.

Watch the full talk

Watch the full recording on MERGE's YouTube channel, with Stakely on staking and real yield in blockchain.

FAQs

Where does staking income come from?
According to the talk, from native issuance, network fees, MEV and additional token incentives.

What is the difference between native, liquid and restaking?
Native is programmed into the chain itself; liquid provides a token that adds liquidity; restaking reuses collateral to secure other networks, with more smart-contract risk.

What should you check before trusting a high APR?
Where the yield comes from, whether it is sustainable or based on token issuance, liquidity and exits, and the operator or contract risks.

Is this investment advice?
No. This content is informational and summarizes what was presented in the talk; it does not constitute investment advice. Consult a professional for your specific situation.