Turning Proof of Stake rewards into fixed-income products

3 Mar 2022

Trillions of dollars are currently sitting in negative-yield bonds, with hundreds of trillions more having their purchasing power eroded by negative real rates. Meanwhile, in crypto, the Proof of Stake industry generates 6.5% annually for the $275 billion of staked capital used for verifying blockchain transactions.

What would a bond-like fixed income product that derives its yield from Proof of Stake look like? Can it be done, and what are the challenges of making it a reality? What role would such a product play in building crypto’s still non-existent interest rate markets?

Research paper contents:

  • The nature of blockchain creates yield opportunities
  • Yields in traditional finance
  • Today's crypto yields and the "worst-case" yield
  • Hedging against market risk and hedging difficulties
  • What would this fixed-income product look like?
  • Are staking returns the lowest risk “risk-free rate” of crypto?
  • Theory versus practice — comments from industry experts

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