Edit 30.06.22: Please note, that we have updated the Staking Index methodology from SR20 to SR10. We are currently gearing up for the launch of the SR10. Please stay tuned for more updates. Read below the original announcement of the SR20.
The SR20 is an objective staking market index. Composed of the largest income-generating crypto-assets, the SR20 tracks the staking rewards being generated from modern Proof-of-Stake technology.
The SR20 is the benchmark for the thriving PoS Industry
Staking Rewards is proud to introduce the SR20, a crypto index that tracks the top 20 Proof-of-Stake (PoS) crypto assets by market capitalization and staked value.
Being the leading data provider and research platform for the PoS crypto market, we believe that the future of crypto won’t be winner-takes-all, but multichain. Currently, an overview and benchmark to reference the state of this ecosystem is missing from the market. Say hello to The SR20.
The SR20 index is based on an unbiased, market-driven methodology. Developed by Staking Rewards, the SR20 auto-compounds the staking rewards earned for securing the network. It is the first crypto index to do so, thereby giving a real representation of the staking crypto market. It is also the correct benchmark to measure your portfolio performance against – or that of your crypto asset manager.
In a similar manner to the S&P 500 for traditional equity markets and the overall economy, the SR20 gives a standardized assessment of the overall Web3 space of smart contract platforms.
Positioned at the center of the staking industry, the SR20 will be the standard for market participants to benchmark against and build their products on top of.
The SR20 Methodology, Allocation and Rebalancing
The SR20 Index is made up of the top 20 Proof-of-Stake crypto assets weighted by their Total Staked Value (capped at the Circulating Market Cap). The Index accrues staking rewards on a continuous basis.
As of Nov. 9th, 2021 the SR20 comprises the following assets:
Source: Staking Rewards.
Every 1st of the month, the index goes through a rebalancing. For every PoS asset listed on StakingRewards.com, we calculate the Asset Weight. This value is the total staked amount per assets, capped at the circulating market cap. This is to prevent those assets where locked (unvested) tokens can be staked (e.g. Solana) from skewing the weighting of the Index. We pick the top 20 assets by Asset Weight, and each of these Assets receives its relative Asset Weight as a percentage of how much of the Total Index Weight they contribute to. The latest total nominal value of the Index is then distributed across the assets, based on their Asset Weight Percentage.
Staking is Hot: The SR20 Outperformed the General Crypto Market by 3.35x
In our recent Staking Ecosystem Report we covered how the Proof-of-Stake market cap increased by 1,550% in the last year (YOY), growing a staggering 1032% since the beginning of the year (YTD).
Staking is growing much faster than the overall crypto market being up “only” by 673% YOY and 245% YTD.
The SR20 is capturing this dynamic with a 760% YTD increase (821% including staking rewards), at a current market capitalization of $840.66B. Composed of the 20 largest PoS networks, thus not covering the long tail of PoS assets, it still outperformed the general crypto market by a factor of 3.1 (3.35 including staking). In comparison, the DeFi Pulse Index DPI made 259% YTD.
The SR20 has averaged a reward rate of 8.8% annualized YTD, meaning that irrespective of the underlying price dynamics, the SR20 would end 2021 with 108.8% of tokens relative to the beginning of the year. Factor in the ongoing bull market of 2021, and you can see the performance of the SR20 is nothing short of mindblowing. In less than 11 months, the SR20 has returned a staggering 821.43%, of which 61.31% are purely due to the staking rewards obtained. During the same time period, $BTC has gone from $29,000 to $61,700; an increase of 113%. As you can see, the overall index has outperformed $BTC by a factor of more than 7x, whilst the return from staking by itself is already more than 50% of the overall BTC ROI.
Source: Staking Rewards
The Opportunity Cost of Not Staking
Currently only 32.8% of PoS market cap is being staked ($275.76B out of $840.66B). Why’s that?
Actively delegating your stake requires a lot of time, research and managerial oversight. These operational hurdles and complexities are the reason why more than two out of three of market participants forgo staking and their potential rewards. What they do not realize is that they are slowly being diluted out of their existing position by those who are accruing staking rewards. Over the long term, the compounding effect of accruing staking rewards becomes drastic. Over ten years, at the current average reward rate of 10%, those that do not stake will miss out on a 2.6x on their portfolio. This is the opportunity cost of opting not to stake.
Source: Staking Rewards
So Much More to Come: For Future Updates on the SR20 Subscribe to the Waitlist
Staking is complex. It can be time consuming and even risky, which is why many do not do it.
At Staking Rewards, we are on a mission to make staking easy, safe and transparent. This is why we are working to make the SR20 investable in the not-too-distant future.
Imagine you could save your time and mindspace by simply buying and holding the SR20. This would allow you to focus on your core competencies and free up your resources to pursue other bets, while still reaping the staking rewards from your asset holdings. Also, you would not need to pick winners by betting on single protocols or dApps. Rather, you’d let the market decide, making it optimal for agnostic investors.
If you want to be among the first to receive information about upcoming updates on our SR20, subscribe to our newsletter here.
We are looking forward to seeing you there.