Ethereum is no longer miners' second most preferred POS crypto

Last week, Terra, the stablecoin blockchain protocol, saw its token, LUNA, overtake Ether (ETH) to become the second most staked cryptocurrency token. Since reaching the position of the second highest staked crypto token in the world, LUNA’s value has declined in line with a global decline in crypto prices. However, the token has still held on to its position – which market reports attribute to be on the basis of positive sentiments towards the Terra project among crypto investors.

Crypto staking can be broadly defined as the act of storing, or locking up, tokens in a crypto wallet registered with an exchange. Once these tokens are stored, they can be used by the blockchain to validate further tokens that are being mined to be brought into the blockchain network. The entire process allows those storing (or staking) their coins to earn an incentive, hence acting as a passive income avenue for crypto investors.

In simpler terms, crypto staking is a process where those who own tokens keep them stored in their wallets. The latter is then utilised by the respective blockchain networks for other related services, against which an interest of sorts is earned by those staking the tokens. The process is similar to storing money in a saving account, where the bank pays users an interest for storing the money – and instead uses this stored money to offer financial services to other customers, such as loans.

At the time of publishing, the Solana blockchain’s SOL token was the highest staked crypto token in the world – with over $32.3 million in staked token value. SOL offers users a yield rate of 5.86 percent for staking tokens – in comparison to 6.17 percent that LUNA offers at the moment.

Interestingly, Terra’s Luna overtook ETH, which has the highest market capitalisation among the top staked crypto tokens. However, according to data from DeFi-Llama (as cited by CoinDesk), ETH is by far the largest token in terms of total staked value of coins stored on apps and platforms built on its blockchain – Ethereum.

As of March 2, ETH represented $118 billion in staked coins across all apps built on its blockchain.