
<p>Following on with our staking data series, this week, we take a look at Cardano.</p>



<p><em>Leveraging our <a href="https://www.stakingrewards.com/resource/api/">Staking Rewards API</a>, we look closely at Cardano staking and validator data to gain insights beyond price movement. Staking and validator activity uncover insights into investor activity and belief. In addition, exploring the Cardano validator set helps ensure there are no structural red flags ahead and provides insights into the validator business.</em></p>



<p></p>



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<p></p>



<h2>Staking Activity</h2>



<p>In the last two quarters, 3.7M Cardano was staked every day. That&#8217;s about $1.3M in value at an average ADA price of $0.34 in the past five months. The most significant single day inflow saw 62.4M ADA staked on October 7, 2022. The largest single day outflow saw 77.6M ADA unstaked on November 13th, soon after the FTX collapse. Since October 1, 2022, until February 2, 2023, 400M ADA has been staked, growing the current balance to 25.5B ADA staked.</p>



<figure class="wp-block-image size-large"><img decoding="async" loading="lazy" width="1800" height="1431" src="https://cms.stakingrewards.com/wp-content/uploads/2023/02/Staking-Flow-vs.-Price-1800x1431.png" alt="" class="wp-image-10576" srcset="https://cms.stakingrewards.com/wp-content/uploads/2023/02/Staking-Flow-vs.-Price-1800x1431.png 1800w, https://cms.stakingrewards.com/wp-content/uploads/2023/02/Staking-Flow-vs.-Price-360x286.png 360w, https://cms.stakingrewards.com/wp-content/uploads/2023/02/Staking-Flow-vs.-Price-80x64.png 80w, https://cms.stakingrewards.com/wp-content/uploads/2023/02/Staking-Flow-vs.-Price-768x610.png 768w, https://cms.stakingrewards.com/wp-content/uploads/2023/02/Staking-Flow-vs.-Price-1536x1221.png 1536w, https://cms.stakingrewards.com/wp-content/uploads/2023/02/Staking-Flow-vs.-Price.png 1960w" sizes="(max-width: 1800px) 100vw, 1800px" /></figure>



<p>About 350M ADA was staked during local lows between $0.24 to $0.31 ADA near the end of December. Despite an increase in tokens staked, the Staking Market Cap remains 9% lower than at the start of October 2022. Cardano’s Staking Market Cap grew 66% from the five month low on December 29, 2022. About 72% of ADA tokens is currently staked, bringing the staking market cap to around $10B. The overall marketcap for ADA currently sits at $14B.</p>



<figure class="wp-block-image size-large"><img decoding="async" loading="lazy" width="1800" height="1436" src="https://cms.stakingrewards.com/wp-content/uploads/2023/02/image-5-1800x1436.png" alt="" class="wp-image-10587" srcset="https://cms.stakingrewards.com/wp-content/uploads/2023/02/image-5-1800x1436.png 1800w, https://cms.stakingrewards.com/wp-content/uploads/2023/02/image-5-360x287.png 360w, https://cms.stakingrewards.com/wp-content/uploads/2023/02/image-5-80x64.png 80w, https://cms.stakingrewards.com/wp-content/uploads/2023/02/image-5-768x613.png 768w, https://cms.stakingrewards.com/wp-content/uploads/2023/02/image-5-1536x1225.png 1536w, https://cms.stakingrewards.com/wp-content/uploads/2023/02/image-5.png 1958w" sizes="(max-width: 1800px) 100vw, 1800px" /></figure>



<h2>Investor Confidence in Staking</h2>



<p>Cardano’s Staking Market Cap growth rate has consistently outperformed Cardano Market Cap growth since December 29, 2022, the bottom in the last five months. Since then, Cardano investors have continued to lock in tokens more confidently, as highlighted by increased staked tokens and Staking Market Cap outperformance. Staking Market Cap growth outpaces Market Cap growth signals a further positive outlook in ADA holder confidence. It&#8217;s also important to note that the circulating supply of ADA grows every epoch, meaning Market Cap growth has additional growth drivers.</p>



<figure class="wp-block-image size-large"><img decoding="async" loading="lazy" width="1800" height="1434" src="https://cms.stakingrewards.com/wp-content/uploads/2023/02/image-8-1800x1434.png" alt="" class="wp-image-10593" srcset="https://cms.stakingrewards.com/wp-content/uploads/2023/02/image-8-1800x1434.png 1800w, https://cms.stakingrewards.com/wp-content/uploads/2023/02/image-8-360x287.png 360w, https://cms.stakingrewards.com/wp-content/uploads/2023/02/image-8-80x64.png 80w, https://cms.stakingrewards.com/wp-content/uploads/2023/02/image-8-768x612.png 768w, https://cms.stakingrewards.com/wp-content/uploads/2023/02/image-8-1536x1224.png 1536w, https://cms.stakingrewards.com/wp-content/uploads/2023/02/image-8.png 1960w" sizes="(max-width: 1800px) 100vw, 1800px" /></figure>



<p>Tokens staked has grown 4.6% since January 9, 2023. However, the number of staking wallets has declined by 8%. The discrepancy points to wallets already staking were growing their staked ADA positions.&nbsp;As a result, the average staked tokens per wallet increased by 20% from 19.8k ADA staked to 23.9k staked.</p>



<figure class="wp-block-image size-large"><img decoding="async" loading="lazy" width="1800" height="1433" src="https://cms.stakingrewards.com/wp-content/uploads/2023/02/image-6-1800x1433.png" alt="" class="wp-image-10590" srcset="https://cms.stakingrewards.com/wp-content/uploads/2023/02/image-6-1800x1433.png 1800w, https://cms.stakingrewards.com/wp-content/uploads/2023/02/image-6-360x287.png 360w, https://cms.stakingrewards.com/wp-content/uploads/2023/02/image-6-80x64.png 80w, https://cms.stakingrewards.com/wp-content/uploads/2023/02/image-6-768x612.png 768w, https://cms.stakingrewards.com/wp-content/uploads/2023/02/image-6-1536x1223.png 1536w, https://cms.stakingrewards.com/wp-content/uploads/2023/02/image-6.png 1964w" sizes="(max-width: 1800px) 100vw, 1800px" /></figure>



<h2>Staking Flow Behavior</h2>



<p>Going back to staking flows in the last two quarters, we notice a few trends that might help ADA delegators make better decisions. </p>



<p>Look out for abrupt staking inflows when the price declines from a recent local top. The behavior occurred three times during significant price movements in the last two quarters. ADA investors should be patient when abrupt inflows occur as local high prices decline.</p>



<figure class="wp-block-image size-large"><img decoding="async" loading="lazy" width="1800" height="1428" src="https://cms.stakingrewards.com/wp-content/uploads/2023/02/Staking-Flow-vs.-Price-1-1800x1428.png" alt="" class="wp-image-10579" srcset="https://cms.stakingrewards.com/wp-content/uploads/2023/02/Staking-Flow-vs.-Price-1-1800x1428.png 1800w, https://cms.stakingrewards.com/wp-content/uploads/2023/02/Staking-Flow-vs.-Price-1-360x286.png 360w, https://cms.stakingrewards.com/wp-content/uploads/2023/02/Staking-Flow-vs.-Price-1-80x63.png 80w, https://cms.stakingrewards.com/wp-content/uploads/2023/02/Staking-Flow-vs.-Price-1-768x609.png 768w, https://cms.stakingrewards.com/wp-content/uploads/2023/02/Staking-Flow-vs.-Price-1-1536x1218.png 1536w, https://cms.stakingrewards.com/wp-content/uploads/2023/02/Staking-Flow-vs.-Price-1.png 1962w" sizes="(max-width: 1800px) 100vw, 1800px" /></figure>



<p>Another staking flow behavior within ADA focuses on consecutive days of continued flows. Several consecutive days of outflows, while the price is moving in the same direction, may signal a more significant move in the same direction. Daily flows must be a similar size, and counter flows must be nonexistent or minimal. ADA investors should look for continued flows in the same direction along with the price to anticipate future price direction.</p>



<figure class="wp-block-image size-large"><img decoding="async" loading="lazy" width="1800" height="1430" src="https://cms.stakingrewards.com/wp-content/uploads/2023/02/Staking-Flow-vs.-Price-2-1800x1430.png" alt="" class="wp-image-10580" srcset="https://cms.stakingrewards.com/wp-content/uploads/2023/02/Staking-Flow-vs.-Price-2-1800x1430.png 1800w, https://cms.stakingrewards.com/wp-content/uploads/2023/02/Staking-Flow-vs.-Price-2-360x286.png 360w, https://cms.stakingrewards.com/wp-content/uploads/2023/02/Staking-Flow-vs.-Price-2-80x64.png 80w, https://cms.stakingrewards.com/wp-content/uploads/2023/02/Staking-Flow-vs.-Price-2-768x610.png 768w, https://cms.stakingrewards.com/wp-content/uploads/2023/02/Staking-Flow-vs.-Price-2-1536x1220.png 1536w, https://cms.stakingrewards.com/wp-content/uploads/2023/02/Staking-Flow-vs.-Price-2.png 1956w" sizes="(max-width: 1800px) 100vw, 1800px" /></figure>



<h2>Validators</h2>



<p>Validators are a vital component of sustainable L1s. Operating validators highlight a sustainability baseline required for network security and decentralization.&nbsp;That said, we looked at overall validator growth and distribution since 2021 for Cardano until mid-February 2, 2023, using our <a href="https://www.stakingrewards.com/resource/api/">Staking Rewards API</a>.</p>



<p>Since 2021, Cardano hasn&#8217;t seen much change in balance distribution across validators. Impressively the largest validators on Cardano have a very small percentage of staked balance.</p>



<figure class="wp-block-image size-full"><img decoding="async" loading="lazy" width="1354" height="1080" src="https://cms.stakingrewards.com/wp-content/uploads/2023/02/Cardano-Validator-BUbble-Graph-9.gif" alt="" class="wp-image-10569"/></figure>



<p>A single Provider sometimes dominates the top 10 validators on Cardano. Top validators also constantly change, much more frequently than other L1s we&#8217;ve analyzed &#8211; likely due to the Cardano validator pool size optimal parameters. A few validators stand out in 2023 based on top balances, including Blockdaemon across several validators in the top 10, Nu.Fi &amp; AdaLite, CARDANIANS.io, WAVE, ADAvault, Pilot Pool, ADALovelacePool, and 1 Percent Pool. The top 10 validators on Cardano account for about 2.86% of staked ADA currently.</p>



<figure class="wp-block-image size-full"><img decoding="async" loading="lazy" width="1346" height="1080" src="https://cms.stakingrewards.com/wp-content/uploads/2023/02/Cardano-Validator-Racing-Graph-.gif" alt="" class="wp-image-10556"/></figure>


<p>Based on Cardano&#8217;s mechanics, validators should limit the pool size to a specific balance. The last limit agreed on was 70M ADA. Any validators with more than 70M ADA are said to be saturated, as all tokens beyond 70M don&#8217;t earn additional rewards for the pool. Hence, Providers are encouraged to run several validators rather than just a single large one. The goal is to encourage decentralization.</p>
<p>Additionally, validators must maximize their validator size before starting a new validator to maximize rewards. When slicing the data by Provider rather than specific validators, we get a better picture which Providers are key to staking on ADA. The top 10 Providers account for 24.4% of all tokens staked on Cardano across 119 validators as of January 28, 2023. Several of the top validators on Cardano are also a part of our <a href="https://docs.stakingrewards.com/verified-provider-program/">Verified Provider Program</a>. Our program assesses Providers in-depth to help users make faster and smarter staking decisions. If you’re looking to stake with a trusted and verified Staking Provider, look for ones with a check mark on their profile on <a href="https://stakingrewards.com/">stakingrewards.com</a>.</p>


<figure class="wp-block-image size-full"><img decoding="async" loading="lazy" width="1350" height="1080" src="https://cms.stakingrewards.com/wp-content/uploads/2023/02/Provider-Racing-Graph.gif" alt="" class="wp-image-10586"/></figure>



<h2><strong>Reward Rates and Validator Selection</strong></h2>



<p>ADA reward and inflation rates are nearly identical, 3.60% and 3.40%, respectively. Commission rates taken by validators on rewards have also increased from 6.3% to 7.05% on all rewards. On average, current ADA real rate returns are slightly negative at -0.17%. &nbsp;Learn more about the ADA rewards system and calculate staking scenarios with the <a href="https://www.stakingrewards.com/earn/cardano/">Cardano staking calculator</a>.</p>



<figure class="wp-block-image size-large"><img decoding="async" loading="lazy" width="1800" height="1434" src="https://cms.stakingrewards.com/wp-content/uploads/2023/02/image-7-1800x1434.png" alt="" class="wp-image-10591" srcset="https://cms.stakingrewards.com/wp-content/uploads/2023/02/image-7-1800x1434.png 1800w, https://cms.stakingrewards.com/wp-content/uploads/2023/02/image-7-360x287.png 360w, https://cms.stakingrewards.com/wp-content/uploads/2023/02/image-7-80x64.png 80w, https://cms.stakingrewards.com/wp-content/uploads/2023/02/image-7-768x612.png 768w, https://cms.stakingrewards.com/wp-content/uploads/2023/02/image-7-1536x1224.png 1536w, https://cms.stakingrewards.com/wp-content/uploads/2023/02/image-7.png 1960w" sizes="(max-width: 1800px) 100vw, 1800px" /></figure>



<p>Breaking down the rates further, we notice significant differences depending on the staking method and chosen validator. Although the average real rate for delegating ADA is -0.17%, running a stake pool returns a 1.52% real rate. See more on current rates and staking options on <a href="http://stakingrewards.com">stakingrewards.com</a>.&nbsp;</p>



<p>We analyzed rate metrics across all ADA validators on February 2, 2023. Validators were filtered for a minimum of 100 wallets staking, a maximum 8% commission fee on rewards, and a 6% reward rate at most. The smallest validator in the set has a balance of 6.2M ADA staked, and the largest has 154M ADA staked. Validators have a wide range of wallets, between 133 to 35.7k. The overall staked balance isn’t necessarily correlated with the number of wallets. For example, <a href="https://www.stakingrewards.com/savings/atomic-wallet/">Atomic Wallet</a> has over 35.7k delegators and ~61M ADA. Many other Validators have similar balances but delegate for only a few thousand wallets.</p>



<figure class="wp-block-image size-large"><img decoding="async" loading="lazy" width="1800" height="1436" src="https://cms.stakingrewards.com/wp-content/uploads/2023/02/image-9-1800x1436.png" alt="" class="wp-image-10595" srcset="https://cms.stakingrewards.com/wp-content/uploads/2023/02/image-9-1800x1436.png 1800w, https://cms.stakingrewards.com/wp-content/uploads/2023/02/image-9-360x287.png 360w, https://cms.stakingrewards.com/wp-content/uploads/2023/02/image-9-80x64.png 80w, https://cms.stakingrewards.com/wp-content/uploads/2023/02/image-9-768x613.png 768w, https://cms.stakingrewards.com/wp-content/uploads/2023/02/image-9-1536x1225.png 1536w, https://cms.stakingrewards.com/wp-content/uploads/2023/02/image-9.png 1958w" sizes="(max-width: 1800px) 100vw, 1800px" /></figure>



<p>Surprisingly delegators aren’t selecting validators based on reward rates and commission fees. There&#8217;s not much correlation with the number of unique wallets, lower commission fees, or higher rewards. This begs the question on how delegators go about their staking decision process. Either delegators lack information or value other factors beyond rates and fees. This perhaps involves ease of use, other features, trust, and many other factors. Further insights into the validator selection process can be found in our <a href="https://stakingrewards.docsend.com/view/aqea87ifa8mw5xkg">State of Staking 2022 report</a>.</p>



<h2>Conclusion</h2>



<p>Staking and validator activity shows Cardano gained a significant increase in staked tokens in the last two months, primarily from wallets upping their balance, despite declining total wallets staking. Since December 11, 2022, staking flows have been positive. A continued outperformance of Staking Market Cap growth relative to Market Cap highlights confidence among ADA holders in the protocol. In addition, investors continue staking despite a slight decline in the reward rate and an increase in benchmark commission fees.</p>



<p>For investors looking to stake Cardano, look closely at staking flow behavior, as it can lead to price action. In addition, explore your validator options, as a wide range of rewards and commission rates affect your real reward rate.</p>



<p>Check out our piece on <a href="https://www.stakingrewards.com/journal/how-to-stake-cardano-ada/">Cardano</a> and our <a href="https://www.stakingrewards.com/earn/cardano/">Cardano asset page</a> to better understand Cardano mechanics, current reward rates, and staking options.</p>


Make Better Decisions Staking Cardano (ADA): Lessons from On-Chain Data


<p>This week, we explore Cosmos on-chain staking and validator data. Last week we looked at Solana&#8217;s on-chain data, <a href="https://newsletter.stakingrewards.com/p/exploring-on-chain-data-the-state">check it out</a>.</p>



<p></p>



<p><em><a href="https://newsletter.stakingrewards.com/">Subscribe</a> to our newsletter to receive our latest articles for free.</em><br><br>Leveraging our&nbsp;<a href="https://www.stakingrewards.com/resource/api/">Staking Rewards API data</a>, we look closely at Cosmos staking and validator activity. Staking and validator activity help assess investor belief in Cosmos beyond more surface level metrics like price movement. In addition, exploring the Cosmos validator set helps us ensure there are no structural red flags ahead while providing insights into the validator business.</p>



<h2>Staking Activity</h2>



<p>Cosmos Staked Tokens balance has increased from 184M to 204M over the past year, growing 10.6% year-over-year, averaging 427.6k tokens per week. ATOM price averaged $14.64 in the same period, leading to staking inflows averaging $6M per week over the year.</p>



<p>Most inflows for the year came in after the year&#8217;s weekly average low of $6.33 on June 12th. Only six weeks since then have there been negative outflows.</p>



<figure class="wp-block-image size-large"><img decoding="async" loading="lazy" width="1800" height="1442" src="https://cms.stakingrewards.com/wp-content/uploads/2023/01/Screen-Shot-2023-01-27-at-1.04.20-AM-1800x1442.png" alt="" class="wp-image-10527" srcset="https://cms.stakingrewards.com/wp-content/uploads/2023/01/Screen-Shot-2023-01-27-at-1.04.20-AM-1800x1442.png 1800w, https://cms.stakingrewards.com/wp-content/uploads/2023/01/Screen-Shot-2023-01-27-at-1.04.20-AM-360x288.png 360w, https://cms.stakingrewards.com/wp-content/uploads/2023/01/Screen-Shot-2023-01-27-at-1.04.20-AM-80x64.png 80w, https://cms.stakingrewards.com/wp-content/uploads/2023/01/Screen-Shot-2023-01-27-at-1.04.20-AM-768x615.png 768w, https://cms.stakingrewards.com/wp-content/uploads/2023/01/Screen-Shot-2023-01-27-at-1.04.20-AM-1536x1230.png 1536w, https://cms.stakingrewards.com/wp-content/uploads/2023/01/Screen-Shot-2023-01-27-at-1.04.20-AM.png 1950w" sizes="(max-width: 1800px) 100vw, 1800px" /></figure>



<p>The most significant outflows happened around the year&#8217;s price highs between February 20th and March 27th. Both weeks with significant outflows were countered in the following week by inflows ~80% of the size of the outflows.</p>



<p>The most meaningful outflow in 2022 happened during the week of October 16th, when 7.9M tokens were unstaked. Before the outflow, Staked Tokens balance was at an all-time high of 209M tokens. Despite late year outflows, most of the following weeks had positive inflows into early 2023 &#8211; in line with a continued price increase.</p>



<figure class="wp-block-image size-large"><img decoding="async" loading="lazy" width="1800" height="1440" src="https://cms.stakingrewards.com/wp-content/uploads/2023/01/Screen-Shot-2023-01-27-at-1.05.57-AM-1800x1440.png" alt="" class="wp-image-10528" srcset="https://cms.stakingrewards.com/wp-content/uploads/2023/01/Screen-Shot-2023-01-27-at-1.05.57-AM-1800x1440.png 1800w, https://cms.stakingrewards.com/wp-content/uploads/2023/01/Screen-Shot-2023-01-27-at-1.05.57-AM-360x288.png 360w, https://cms.stakingrewards.com/wp-content/uploads/2023/01/Screen-Shot-2023-01-27-at-1.05.57-AM-80x64.png 80w, https://cms.stakingrewards.com/wp-content/uploads/2023/01/Screen-Shot-2023-01-27-at-1.05.57-AM-768x614.png 768w, https://cms.stakingrewards.com/wp-content/uploads/2023/01/Screen-Shot-2023-01-27-at-1.05.57-AM-1536x1228.png 1536w, https://cms.stakingrewards.com/wp-content/uploads/2023/01/Screen-Shot-2023-01-27-at-1.05.57-AM.png 1958w" sizes="(max-width: 1800px) 100vw, 1800px" /></figure>



<h2>Investor Confidence in Staking</h2>



<p>Cosmos&#8217; Staking Market Cap growth rate has outperformed Cosmos Market Cap growth rate consistently since October 25th, 2022. Cosmos investors are gaining confidence and locking in their position in Cosmos at a faster rate than the ATOM price is increasing. The trend has continued into the beginning of the year. When Staking Market Cap, which is staked value in USD, is growing faster as a percentage relative to the overall Market Cap, it implies investors are staking and locking in positions more as token prices increase.</p>



<figure class="wp-block-image size-large"><img decoding="async" loading="lazy" width="1800" height="1441" src="https://cms.stakingrewards.com/wp-content/uploads/2023/01/Screen-Shot-2023-01-27-at-1.07.38-AM-1800x1441.png" alt="" class="wp-image-10530" srcset="https://cms.stakingrewards.com/wp-content/uploads/2023/01/Screen-Shot-2023-01-27-at-1.07.38-AM-1800x1441.png 1800w, https://cms.stakingrewards.com/wp-content/uploads/2023/01/Screen-Shot-2023-01-27-at-1.07.38-AM-360x288.png 360w, https://cms.stakingrewards.com/wp-content/uploads/2023/01/Screen-Shot-2023-01-27-at-1.07.38-AM-80x64.png 80w, https://cms.stakingrewards.com/wp-content/uploads/2023/01/Screen-Shot-2023-01-27-at-1.07.38-AM-768x615.png 768w, https://cms.stakingrewards.com/wp-content/uploads/2023/01/Screen-Shot-2023-01-27-at-1.07.38-AM-1536x1229.png 1536w, https://cms.stakingrewards.com/wp-content/uploads/2023/01/Screen-Shot-2023-01-27-at-1.07.38-AM.png 1954w" sizes="(max-width: 1800px) 100vw, 1800px" /></figure>



<p>Comparing Staking Market Cap vs. Market Cap across all PoS assets shows the opposite result to Cosmos. Global Staking Market Cap is decreasing in value faster than the Market Cap of PoS protocols, meaning investors are unstaking tokens and have lost confidence in locking positions. The trend began in early November during the FTX collapse and continued through the end of the year. The trend came close to reversing in late January 2023. In January the Global Staking Market Cap growth began to outpace but not outgrow grow the Global Market Cap of PoS protocols relative to October 25, 2022.</p>



<figure class="wp-block-image size-large"><img decoding="async" loading="lazy" width="1800" height="1436" src="https://cms.stakingrewards.com/wp-content/uploads/2023/01/Screen-Shot-2023-01-27-at-1.11.02-AM-1800x1436.png" alt="" class="wp-image-10532" srcset="https://cms.stakingrewards.com/wp-content/uploads/2023/01/Screen-Shot-2023-01-27-at-1.11.02-AM-1800x1436.png 1800w, https://cms.stakingrewards.com/wp-content/uploads/2023/01/Screen-Shot-2023-01-27-at-1.11.02-AM-360x287.png 360w, https://cms.stakingrewards.com/wp-content/uploads/2023/01/Screen-Shot-2023-01-27-at-1.11.02-AM-80x64.png 80w, https://cms.stakingrewards.com/wp-content/uploads/2023/01/Screen-Shot-2023-01-27-at-1.11.02-AM-768x613.png 768w, https://cms.stakingrewards.com/wp-content/uploads/2023/01/Screen-Shot-2023-01-27-at-1.11.02-AM-1536x1225.png 1536w, https://cms.stakingrewards.com/wp-content/uploads/2023/01/Screen-Shot-2023-01-27-at-1.11.02-AM.png 1958w" sizes="(max-width: 1800px) 100vw, 1800px" /></figure>



<h2>Validator Distribution</h2>



<p>Validators are vital to sustainable L1s. Operating validators highlight a sustainability baseline required for network security and decentralization.&nbsp;We looked at overall validator growth and distribution for Cosmos from August 28, 2020, to January 24, 2023 to better gauge decentralization.<a href="https://substackcdn.com/image/fetch/f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F0fc78e79-a66c-41a4-8c53-c9e7a8a494c9_600x509.gif" target="_blank" rel="noreferrer noopener"></a></p>



<figure class="wp-block-image size-full"><img decoding="async" loading="lazy" width="1486" height="1080" src="https://cms.stakingrewards.com/wp-content/uploads/2023/01/CosmosValidatorDistirbution.gif" alt="" class="wp-image-10517"/></figure>



<p>A few things stand out. The top ranked validator at any point in time maintains a consistent percentage of network balance between 5.5% to 7.5%. The top 2-10 validators also maintain a relatively similar balance over the years since August, 2020. Cosmos is dominated by large validators despite many smaller ones entering. Over time Cosmos has grown from 128 to 482 validators. However, not all are still active. Currently, Cosmos has 170 active validators.</p>



<p>To further probe the question of decentralization on Cosmos, we compare Staked Tokens balance vs. Average Validator Balance vs. the Number of Validators. In an ideal scenario, Average Validator Balance should continuously decline as more validators join and the number of tokens staked increases.<a href="https://substackcdn.com/image/fetch/f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2Fa941b5ac-9f6b-448a-8449-915b7629cdfa_1950x1512.png" target="_blank" rel="noreferrer noopener"></a></p>



<figure class="wp-block-image size-large"><img decoding="async" loading="lazy" width="1800" height="1432" src="https://cms.stakingrewards.com/wp-content/uploads/2023/01/Screen-Shot-2023-01-26-at-11.36.05-PM-1800x1432.png" alt="" class="wp-image-10512" srcset="https://cms.stakingrewards.com/wp-content/uploads/2023/01/Screen-Shot-2023-01-26-at-11.36.05-PM-1800x1432.png 1800w, https://cms.stakingrewards.com/wp-content/uploads/2023/01/Screen-Shot-2023-01-26-at-11.36.05-PM-360x286.png 360w, https://cms.stakingrewards.com/wp-content/uploads/2023/01/Screen-Shot-2023-01-26-at-11.36.05-PM-80x64.png 80w, https://cms.stakingrewards.com/wp-content/uploads/2023/01/Screen-Shot-2023-01-26-at-11.36.05-PM-768x611.png 768w, https://cms.stakingrewards.com/wp-content/uploads/2023/01/Screen-Shot-2023-01-26-at-11.36.05-PM-1536x1222.png 1536w, https://cms.stakingrewards.com/wp-content/uploads/2023/01/Screen-Shot-2023-01-26-at-11.36.05-PM.png 1964w" sizes="(max-width: 1800px) 100vw, 1800px" /></figure>



<p>Cosmos shows the validator count growing and the average validator balance shrinking in tandem with the growth of tokens staked starting in Q3 2021. This suggests new validators were entering the space. However not all new validators necessarily remained active or gained significant balance as highlighted by steady averages when breaking out Average Validator Balance by validator Balance Rank. </p>



<figure class="wp-block-image size-large"><img decoding="async" loading="lazy" width="1800" height="1440" src="https://cms.stakingrewards.com/wp-content/uploads/2023/01/image-1-1800x1440.png" alt="" class="wp-image-10534" srcset="https://cms.stakingrewards.com/wp-content/uploads/2023/01/image-1-1800x1440.png 1800w, https://cms.stakingrewards.com/wp-content/uploads/2023/01/image-1-360x288.png 360w, https://cms.stakingrewards.com/wp-content/uploads/2023/01/image-1-80x64.png 80w, https://cms.stakingrewards.com/wp-content/uploads/2023/01/image-1-768x614.png 768w, https://cms.stakingrewards.com/wp-content/uploads/2023/01/image-1-1536x1228.png 1536w, https://cms.stakingrewards.com/wp-content/uploads/2023/01/image-1.png 1948w" sizes="(max-width: 1800px) 100vw, 1800px" /></figure>



<h2>Top Validators</h2>



<p>It&#8217;s essential to track the top validators in Cosmos since it leads us to the Staking Providers behind them. Beyond centralization concerns by stake, we want to ensure the validator Providers are running sustainable businesses and won’t negatively affect network security. One of the biggest challenges for validators is competition amongst themselves, which currently threatens the overall PoS ecosystem, not just Cosmos. We cover validator competition in-depth in our<a href="https://stakingrewards.docsend.com/view/aqea87ifa8mw5xkg">&nbsp;State of Staking 2022 Ecosystem Report</a>.</p>



<p>To conduct the Cosmos validator analysis, we ranked validators by Stake Balance and identified the top 10 from August 28, 2020, to January 24, 2023. A total of 18 addresses have been in the top 10. We used our <a href="https://www.stakingrewards.com/resource/api/">Staking Rewards API</a> data to identify the validator wallets.<a href="https://substackcdn.com/image/fetch/f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F4ebb27b7-cfb4-4de0-90b5-00d7bb88e5d6_600x338.gif" target="_blank" rel="noreferrer noopener"></a></p>



<figure class="wp-block-image size-full"><img decoding="async" loading="lazy" width="1358" height="1080" src="https://cms.stakingrewards.com/wp-content/uploads/2023/01/CosmosoTop10Validators-1.gif" alt="" class="wp-image-10516"/></figure>



<p>Eight of the top 10 Staking Providers active on Cosmos in 2023 have never left the top 10 for more than two quarters in a row since 2020. The eight include Coinbase Custody, <a href="https://www.stakingrewards.com/savings/stake-fish/">stake.fish</a>, <a href="https://www.stakingrewards.com/savings/dokia-capital/">DokiaCapital</a>, <a href="https://www.stakingrewards.com/savings/paradigm/">Paradigm</a>, <a href="https://www.stakingrewards.com/savings/sg-1/">SG-1</a>, GAME, <a href="https://www.stakingrewards.com/savings/zero-knowledge-validator/">Zero Knowledge Validator (ZKV)</a>, and <a href="https://www.stakingrewards.com/savings/polychain-labs/">Polychain</a>. Currently, stake.fish is the number one validator on Cosmos by balance. <a href="https://www.stakingrewards.com/savings/binance-staking/">Binance Staking</a> maintained the number-one position for the longest duration from 2020 Q4 to 2022 Q3. In 2022 Q4, Binance Staking fell to sixth place. Several of the top validators on Cosmos are also a part of our <a href="https://docs.stakingrewards.com/verified-provider-program/">Verified Provider Program</a>. Our program assesses validators in-depth to help users make faster and smarter staking decisions. If you&#8217;re looking to stake with a trusted and verified Staking Providers look for ones with a check mark on <a href="https://stakingrewards.com/">stakingrewards.com</a>.</p>



<p>One factor to keep an eye on in Cosmos is the Balance Distribution of staked ATOM amongst the top 10 validators. Over time, distribution of staked tokens number to improve for a truly decentralized and secure network. The Staked Tokens balance delegated to the top 10 validators is currently at 43%.</p>



<h2>Reward Rates vs. Inflation</h2>



<p>The Cosmos approach to rewards and inflation aims to maintain a 67% staking ratio. Cosmos relies on its staking ratio to determine the inflation rate, which also affects reward rates. At a 67% staking ratio, inflation on Cosmos stops changing. Inflation decreases gradually to 7% if 67% of ATOM is staked, and vice versa. Learn more about the Cosmos rewards system and calculate staking scenarios with the <a href="https://www.stakingrewards.com/earn/cosmos/">Cosmos staking calculator</a>. </p>



<p>Currently, running your own Cosmos validator yields 23.5% APR whereas delegating yields 22%. However, considering inflation, and a current average of 7% commission fee on rewards, the real yield is more around 5.4%.  Real yields are higher than usual on Cosmos since early 2021. The high yield aims to incentivize ATOM stakers, so the staking ratio increases from 63% to 67%. Once the staking ratio increases back to 67%, rates will trend back down.</p>



<figure class="wp-block-image size-large"><img decoding="async" loading="lazy" width="1800" height="1427" src="https://cms.stakingrewards.com/wp-content/uploads/2023/01/image-3-1800x1427.png" alt="" class="wp-image-10537" srcset="https://cms.stakingrewards.com/wp-content/uploads/2023/01/image-3-1800x1427.png 1800w, https://cms.stakingrewards.com/wp-content/uploads/2023/01/image-3-360x285.png 360w, https://cms.stakingrewards.com/wp-content/uploads/2023/01/image-3-80x63.png 80w, https://cms.stakingrewards.com/wp-content/uploads/2023/01/image-3-768x609.png 768w, https://cms.stakingrewards.com/wp-content/uploads/2023/01/image-3-1536x1218.png 1536w, https://cms.stakingrewards.com/wp-content/uploads/2023/01/image-3.png 1958w" sizes="(max-width: 1800px) 100vw, 1800px" /></figure>



<h2><a href="https://substackcdn.com/image/fetch/f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F6a8c229e-1e18-4560-9592-0a61c80af259_1954x1552.png" target="_blank" rel="noreferrer noopener"></a>Conclusions</h2>



<p>Staking and validator activity shows Cosmos is gradually bouncing back in terms of Staking Market Cap after hitting a low staking ratio of 58.8% at the end of 2021. Currently, a staking ratio below 67% make Cosmos a relatively attractive staking option as real reward rates continue to reach year highs. The market seems to think so as well. Cosmos Staking Market Cap growth is outpacing its Market Cap growth rate, while the Global PoS equivalent metrics are doing the reverse. On a cautionary note, it&#8217;s noteworthy that Cosmos has 43% of its current Staked Tokens delegated to the top 10 validators. Ideally, the share of Staked Tokens in the top 10 validators reduces over time. Check out our piece on the <a href="https://www.stakingrewards.com/journal/cosmos-2-0-a-multi-app-chain-future-with-shared-security%ef%bf%bc/">Cosmos roadmap</a> or our <a href="https://www.stakingrewards.com/earn/cosmos/">Cosmos asset page</a> to better understand Cosmos.</p>


Exploring On-Chain Data: The State of Cosmos (ATOM) Staking and Validators


<p>Download the Report here&nbsp;<img decoding="async" src="https://a.slack-edge.com/production-standard-emoji-assets/14.0/apple-medium/1f447@2x.png" alt=":point_down:"></p>



<div class="wp-block-file"><a href="https://stakingrewards.docsend.com/view/ykwpw4qtdfy3wkpd" target="_blank" rel="noopener noreferrer" class="wp-block-file__button wp-element-button" download="" aria-describedby="wp-block-file--media-c873eb8f-449a-4114-9c17-0a203d3d82eb">Download</a></div>



<p></p>



<p><img decoding="async" src="https://a.slack-edge.com/production-standard-emoji-assets/14.0/apple-medium/1f446@2x.png" alt=":point_up_2:"><img decoding="async" src="https://a.slack-edge.com/production-standard-emoji-assets/14.0/apple-medium/1f446@2x.png" alt=":point_up_2:"><img decoding="async" src="https://a.slack-edge.com/production-standard-emoji-assets/14.0/apple-medium/1f446@2x.png" alt=":point_up_2:"><img decoding="async" src="https://a.slack-edge.com/production-standard-emoji-assets/14.0/apple-medium/1f446@2x.png" alt=":point_up_2:"></p>



<p>At its peak in 2021, the top 138 PoS protocols boasted $324B in staked token value. Today, staked tokens are valued at $71B, a terrifying 78% fall. What happened, and where do we go next?</p>



<figure class="wp-block-image size-large" id="USDStakedBalance"><img decoding="async" loading="lazy" width="1800" height="1384" src="https://cms.stakingrewards.com/wp-content/uploads/2022/12/Screen-Shot-2022-12-17-at-8.24.05-AM-1800x1384.png" alt="A look at the total value of Staked tokens in USD across 138 PoS protocols." class="wp-image-10391" srcset="https://cms.stakingrewards.com/wp-content/uploads/2022/12/Screen-Shot-2022-12-17-at-8.24.05-AM-1800x1384.png 1800w, https://cms.stakingrewards.com/wp-content/uploads/2022/12/Screen-Shot-2022-12-17-at-8.24.05-AM-360x277.png 360w, https://cms.stakingrewards.com/wp-content/uploads/2022/12/Screen-Shot-2022-12-17-at-8.24.05-AM-80x62.png 80w, https://cms.stakingrewards.com/wp-content/uploads/2022/12/Screen-Shot-2022-12-17-at-8.24.05-AM-768x591.png 768w, https://cms.stakingrewards.com/wp-content/uploads/2022/12/Screen-Shot-2022-12-17-at-8.24.05-AM-1536x1181.png 1536w, https://cms.stakingrewards.com/wp-content/uploads/2022/12/Screen-Shot-2022-12-17-at-8.24.05-AM.png 2008w" sizes="(max-width: 1800px) 100vw, 1800px" /><figcaption class="wp-element-caption">A look at the total value of Staked tokens in USD across 138 PoS protocols.</figcaption></figure>


<p>We&#8217;ve compiled a comprehensive Staking Ecosystem report packed with proprietary survey insights from over 1,700 crypto users and 30 market-leading validator entities, high-profile speaker panel insights from our Staking Summit, and a wealth of streamlined raw validator data accessible via our Staking Rewards API.</p>
<p>The resulting 11,000-word report features 52 graphs and offers insights that are hard to find elsewhere.</p>
<p>The report explores concerns and innovations around decentralization, delves deep into users’ approaches to selecting protocols and their thoughts on staking, and provides unfiltered insights from validator operators who are sounding the alarm on their industry.</p>
<blockquote>
<p><strong>&#8220;Our report shows validators are potentially facing existential challenges that threaten not only their business but also the entire decentralization ethos of blockchains.&#8221;</strong> &#8211; Mirko Schmiedl, Co-Founder and CEO at Staking Rewards</p>
</blockquote>
<p>Challenges are many, and if you’re an investor, read this report to understand the crucial role of delegating your tokens. If you’re a validator or thinking of becoming one, read the report to see what’s lurking and prepare to weather the storms ahead with insights from industry veterans.</p>
<p>Insiders in the report discuss the consequences of larger validator actions, increasing the risk of centralization. Insiders claim larger validators can afford to undercut commission fees to increase AUM. As a result, larger competitors have more revenue overall, more runway to build better infrastructure, and more voting power over protocols &#8211; a serious threat to decentralization.</p>
<p>To overcome these challenges for business continuity and increasing decentralization, industry operators recommend smaller validators focus on alternative revenue streams, offer value-added products and services, and implement new technologies such as liquid staking, MEV capture advancements, and decentralized validator technology (DVT).</p>
<p>Mr. Schmiedl adds, “Our report concludes that many insiders believe regulatory clarity is coming in 2023, which will propagate institutional interest and action. As institutions join the space, we anticipate they will also consider running validators, further helping counter a key issue in PoS, centralization.”</p>
<p>Despite headwinds, users and validator operators remain bullish on the future of crypto and discuss several positive narratives in the State of Staking 2022 report. Further, we overview six key catalysts we&#8217;re observing in 2023.</p>
<p>Staking Rewards is committed to advancing the long-term success of PoS protocols and enabling investors and validators to achieve their goals. The insights provided in the 2022 Staking Ecosystem Report will help drive the industry forward and support its continued growth.</p>


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Staking Rewards

Make Better Decisions Staking Cardano (ADA): Lessons from On-Chain Data

Exploring On-Chain Data: The State of Cosmos (ATOM) Staking and Validators

Staking Validators in Potential Crisis: The 2022 Staking Ecosystem Report

GMX: The perps DEX of the future

The Bridge Chain Between Legacy Finance and Blockchains

The Staking Industry Newsletter

Reviews

Make Better Decisions Staking Cardano (ADA): Lessons from On-Chain Data

Exploring On-Chain Data: The State of Cosmos (ATOM) Staking and Validators

Staking Validators in Potential Crisis: The 2022 Staking Ecosystem Report

GMX: The perps DEX of the future

The Bridge Chain Between Legacy Finance and Blockchains

Research

Make Better Decisions Staking Cardano (ADA): Lessons from On-Chain Data

Exploring On-Chain Data: The State of Cosmos (ATOM) Staking and Validators

Staking Validators in Potential Crisis: The 2022 Staking Ecosystem Report

GMX: The perps DEX of the future

The Bridge Chain Between Legacy Finance and Blockchains