OwnLayer (OWN)$EIGEN
The amount staked in the coin has exceeded the amount in circulation. This causes staking rewards to decrease and user interest to decrease. Some investors are also earning rewards from assets that are not yet active in the market by staking their locked coins.
Today, there was a remarkable development in the cryptocurrency world. Popular analyst Ignas announced that more EigenLayer (EIGEN) was staked than the amount in circulation. This reduces the appeal of staking rewards and prevents the altcoin from increasing in value. According to the data, while there are currently 2.42 billion EIGEN coins staked on the network, there are only 1.86 billion coins in circulation. The reason for this difference is that investors can also stake their "locked" coins. In other words, coins that are not active in the market can also be included in the staking process. Ignas stated that this situation is not limited to EIGEN alone, and that similar problems are experienced in other altcoin projects such as TIA. Staking locked coins negatively affects the natural functioning of the market by reducing the rewards that other users can receive.
The higher the amount of staked coins than the amount in circulation, the lower the annual interest yield (APY) rates. The lower the APY, the less interest new investors have in purchasing and staking that asset. As a result, this makes it harder for the market value of the relevant altcoin to increase.
Such situations are important in understanding how staking works in the cryptocurrency world. While users want to earn passive income by staking their coins, the presence of locked coins in some systems creates a significant obstacle to their value increase by reducing the attractiveness of the rewards.
