According to Harvey, the “crowding out effect” could come into play if the Federal Reserve continues to hike interest rates. Currently, the 10-year Treasury yield stands at 4.7%, which is higher than Ethereum’s staking reward of 3.9%. In this scenario, Harvey suggests that investors face a dilemma: they can either invest in a “risk-free” 10-year Treasury bond that offers a higher yield or opt for the “risky Ethereum staking Ponzi scheme” with a lower yield.
Source: The reason? Inflation. Payouts from Treasury bonds are still subject to inflation, which can erode the real value of returns over time. On the other hand, claims to have a deflationary model due to its continuously reducing supply, especially following the implementation of EIP-1559, which burns a portion of transaction fees.
This article was originally published on U.Today
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