dYdX

Cosmos

Rewards

Ethereum

when

<p>A staking reward is paid out of two pools, and neither one is other stakers’ principal. The first pool is newly created tokens that the protocol mints on a schedule written into its code. The second is a share of the fees that ordinary users pay to get their transactions included. Which pool actually reaches a given staker’s wallet, and how the split happens before it does, is not the same mechanism on every chain — and that difference is the part most explainers skip.</p><h2 id="the-two-sources-and-why-staking-pool-is-a-misleading-mental-model">The two sources, and why “staking pool” is a misleading mental model</h2><p>The Securities and Exchange Commission’s Division of Corporation Finance described this directly in a 29 May 2025 statement on protocol staking: validators earn rewards of “two types” — newly minted crypto assets distributed programmatically by the network, and a percentage of the transaction fees paid by users seeking to add transactions to the network. Neither type involves redirecting another staker’s deposited balance. A validator’s own staked assets remain locked and under the control of whoever holds them — the owner in solo staking, or a custodian in custodial staking — separate from the reward stream itself, per the SEC statement.</p><h2 id="ethereum-two-layers-two-accrual-points">Ethereum: two layers, two accrual points</h2><p>Ethereum splits this further than most chains, because it separates the reward into a consensus-layer component and an execution-layer component that land in different places. According to ethereum.org’s developer documentation, a validator that locks up ETH (32 ETH is the amount cited by both ethereum.org and Consensys, in a 3 July 2024 article) earns consensus-layer rewards for making timely votes on the correct source checkpoint, target checkpoint and head of the chain, and for proposing blocks and joining sync committees when selected. Ethereum’s specification assigns weights to each of these actions — a validator that does everything correctly in a slot where it is neither the block proposer nor part of a sync committee can earn up to 6.75/8 of the base reward, per ethereum.org’s documentation — and these consensus-layer rewards are new ETH issuance, credited directly to the validator’s 32 ETH balance.</p><p>The execution layer works differently. Consensys explains that when a validator is chosen to propose a block, it collects gas fees and, often, maximal extractable value (MEV) from the transactions in that block, and this reward accrues immediately to a separate address the validator specifies — not to the 32 ETH consensus-layer balance. The two are only reconciled later, when Ethereum’s partial-withdrawal mechanism sweeps any balance above 32 ETH from the consensus layer down to the execution layer, according to Consensys.</p><p>Ethereum’s protocol also punishes dishonesty out of the same balance rewards are paid into. ethereum.org’s documentation describes slashing, though it gives two different figures for the immediate burn within the same page: an introductory summary says a validator caught proposing two blocks for the same slot, or double-voting, has “up to 1 ETH” burned before removal begins, while a more detailed section on the same page states the burn is 0.0078125 of the validator’s effective balance, scaled linearly with balance. This page cannot resolve that discrepancy; both figures come from the same ethereum.org documentation. What both sections agree on is that after the initial burn, the validator enters a 36-day exit period during which its stake continues to drain, with a larger “correlation penalty” applied on day 18 if many validators are slashed at once. Separately, if the chain goes more than four epochs without finalizing, an “inactivity leak” begins bleeding stake from offline validators — a scenario ethereum.org says was observed on the Medalla testnet when less than 66% of active validators could agree on the head of the chain.</p><p>BlackRock’s iShares, in a March 2026 article promoting its iShares Staked Ethereum Trust ETF (ETHB), put current figures on this split: with roughly 30% of all ETH staked, a well-functioning validator was earning about 2.75% annually from issuance rewards, and about 0.1% more from transaction fees over the prior month, against overall staking reward estimates of 2.5% to 3% a year and an overall ETH issuance rate of about 0.8% — all as of March 2026, per iShares. These are BlackRock’s own figures, published to market a fund that pays out ETH staking rewards, and they are not verified against Ethereum’s protocol data anywhere in this evidence.</p><h2 id="cosmos-sdk-chains-one-fee-pool-split-pro-rata">Cosmos-SDK chains: one fee pool, split pro-rata</h2><p>Chains built on the Cosmos SDK — the Cosmos Hub and dYdX among them — do not separate consensus-layer issuance from execution-layer fees the way Ethereum does. dYdX’s own documentation describes a single mechanism: trading fees and gas fees collected by the protocol are gathered each block into a fee-collector account, moved to a distribution-module account the following block, and then split among validators and their delegators in proportion to how much each has staked, after a community tax and each validator’s own commission rate are subtracted. dYdX states the formula as the fee pool multiplied by a delegator’s share of total staked tokens, multiplied by one minus the community tax rate, multiplied by one minus the validator’s commission rate.</p><p>The Cosmos Hub works the same way in practice. Staking Rewards’ Cosmos calculator page describes two sources feeding the pool — newly issued ATOM, minted each block and distributed to bonded stakers, and a share of transaction fees — with the network reward rate adjusting as the proportion of ATOM staked changes. Its own worked example: staking 100 ATOM at a 15% annual reward rate, after a 5% validator commission is deducted, nets roughly 14.25 ATOM over a year (100 × 0.15 × 0.95), per the calculator’s FAQ. Coinbase’s Cosmos documentation adds that Cosmos Hub inflation can rise anywhere from 7% to 20% annually if less than two-thirds of ATOM’s supply is staked, though Coinbase flags this range explicitly as an unverified third-party estimate rather than a figure it stands behind.</p><p>Unlike Ethereum’s automatic accrual, Staking Rewards notes that Cosmos Hub delegators must manually claim their rewards — they sit in the distribution module as a claimable balance, accruing roughly every six seconds, but they do not compound until the staker claims and restakes them.</p><h2 id="where-the-third-party-s-cut-comes-out">Where the third party’s cut comes out</h2><p>On both networks, using anyone other than your own validator means someone takes a cut before the reward reaches you. dYdX’s formula bakes a validator commission rate directly into the payout. Staking Rewards makes the same point for Cosmos: two delegators staking an identical amount can earn different net yields purely because their validators charge different commissions. Coinbase’s own documentation describes this as a “service fee” on rewards earned by ATOM delegated to its validator, paid to Coinbase automatically by the protocol before the remainder reaches the customer. The SEC’s May 2025 statement describes the custodial version of this arrangement more broadly: a custodian holds staked assets in a wallet it controls, stakes on the owner’s behalf for an agreed portion of the rewards, and — per the statement — is not supposed to use the deposited assets for its own operational purposes, lend or rehypothecate them, or trade or speculate with them.</p><h2 id="the-common-misreading">The common misreading</h2><p>It is easy to assume a staking reward comes out of a shared pot funded by everyone’s deposited principal — as if rewards were interest paid from other people’s locked coins. Every source here describes the opposite: rewards come from token issuance the protocol creates on top of existing supply, and from fees paid by transaction senders, not by redistributing what other stakers put up as collateral. The SEC’s statement is explicit that staked assets remain under the owner’s or custodian’s control throughout and are not the source of the reward itself.</p><h2 id="what-this-page-does-not-tell-you">What this page does not tell you</h2><p>This page cannot tell a reader the current reward rate for ETH or ATOM at the moment they read it. Every percentage here is dated to its source, and every source describes the underlying rate as continuously variable — Ethereum’s base reward moves with the total ETH staked, and Cosmos issuance moves with the staked ratio.</p><p>The Ethereum reward-rate figures — 2.5% to 3% overall, 2.75% from issuance, 0.1% from fees, 30% of ETH staked, 0.8% overall issuance — all come from BlackRock’s iShares, an asset manager marketing a staked-ETH exchange-traded fund, dated March 2026. This page has no independent, protocol-level source confirming those exact figures.</p><p>Several primary documents used here — ethereum.org’s developer documentation, dYdX’s staking-rewards page, the Staking Rewards Cosmos calculator, and Coinbase’s Cosmos FAQ — carry no publication date in the evidence available. They read as living pages that the operators update, which means a figure quoted from them today may already have changed by the time this page is read.</p><p>The Cosmos SDK’s own staking-module documentation was available to this page only as a headline, so nothing beyond its title can be attributed to it; this page relies instead on dYdX, the Staking Rewards calculator and Coinbase for how Cosmos-style fee distribution works.</p><p>Coinbase itself states that its cited 7%-to-20% Cosmos inflation range is an unverified third-party estimate, and warns that actual reward rates may vary substantially — that caveat is Coinbase’s own, not this page’s addition.</p><p>Finally, the SEC’s May 2025 statement is issued by the Division of Corporation Finance and presented, in the Division’s own words, as the Division’s “views” rather than a Commission rule. Nothing in the evidence reviewed for this page indicates whether the statement has since been amended, withdrawn, or superseded.</p><h2 id="sources">Sources</h2><p>Every fact above is attributed to one of these reports. Where they disagree, the article says so.</p><ul class="acd-sources"><li><a href="https://ethereum.org/developers/docs/consensus-mechanisms/pos/rewards-and-penalties/" rel="noopener noreferrer nofollow">TheCoinrise reference desk</a></li><li><a href="https://consensys.io/blog/your-guide-to-ethereum-validator-staking-rewards" rel="noopener noreferrer nofollow">TheCoinrise reference desk</a></li><li><a href="https://docs.dydx.xyz/concepts/trading/rewards/staking-rewards" rel="noopener noreferrer nofollow">TheCoinrise reference desk</a></li><li><a href="https://www.sec.gov/newsroom/speeches-statements/statement-certain-protocol-staking-activities-052925" rel="noopener noreferrer nofollow">TheCoinrise reference desk</a></li><li><a href="https://www.ishares.com/us/insights/portfolio-insights/cryptocurrency-staking-guide-ethereum" rel="noopener noreferrer nofollow">TheCoinrise reference desk</a></li><li><a href="https://docs.cosmos.network/v0.47/build/modules/staking" rel="noopener noreferrer nofollow">TheCoinrise reference desk</a><em>(headline only)</em></li><li><a href="https://www.stakingrewards.com/asset/cosmos/calculator" rel="noopener noreferrer nofollow">TheCoinrise reference desk</a></li><li><a href="https://docs.cdp.coinbase.com/staking/staking-delegation-guides/cosmos/support/cosmos-faq" rel="noopener noreferrer nofollow">TheCoinrise reference desk</a></li></ul><p>The post <a href="https://thecoinrise.com/where-staking-reward-comes-from-issuance-fees/" rel="noopener noreferrer nofollow">Where a staking reward actually comes from: issuance, fees, and who takes a cut</a> appeared first on <a href="https://thecoinrise.com/" rel="noopener noreferrer nofollow">TheCoinrise.com</a>.</p>

Where a staking reward actually comes from: issuance, fees, and who takes a cut

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