Grayscale research head Zach Pandl says token issuance can wipe out staking rewards, with HYPE leading and CRV last

Grayscale says token issuance can cancel out staking rewards, and its new valuation framework shows how much. Among 10 protocols tested, Hyperliquid’s HYPE posted the highest tokenholder yield at 8.0%, while Curve’s CRV came last at -5.5%, according to research head Zach Pandl.

“Crypto valuations don’t have to rely on narratives alone,” Pandl wrote.

The approach separates the income generated by a blockchain application from the value ultimately attributable to its tokenholders. Trading, lending and other financial activities generate fees for onchain applications. These applications also incur costs, including payments to liquidity providers, lenders and other participants who supply capital or services.

After deducting these expenses from the fees collected, investors can estimate protocol earnings and compare them with circulating market capitalization. This provides a way to evaluate the economic performance of different applications without relying exclusively on token prices, popularity or market sentiment.

Grayscale’s framework uses two measures: tokenholder yield and adjusted earnings yield. Although both assess economic value, they examine different aspects of a protocol’s performance and account for supply changes in distinct ways.

Tokenholder yield incorporates staking rewards and buybacks, subtracts token issuance and divides the resulting figure by circulating market capitalization. Adjusted earnings yield, meanwhile, divides total protocol earnings by circulating market capitalization before subtracting circulating supply inflation.

Together, the measures are designed to show whether a protocol’s earnings and distributions translate into economic benefits for existing holders. They also help investors distinguish between a project that generates revenue and one whose token economics allow holders to retain a meaningful share of that value.

Buybacks, staking and crypto token inflation

Buybacks, token burns and staking distributions are among the mechanisms blockchain projects use to return value to participants or influence token supply. However, their effects depend on how they are funded and whether new issuance offsets the benefits.

Hyperliquid’s revenue-funded $HYPE buybacks provide an example of how a protocol can connect operating activity with token repurchases. Trading activity generates fees for the exchange, and those fees help determine the resources available for buybacks. The mechanism ties potential returns to the platform’s business performance rather than relying solely on token-price appreciation.

Buybacks and token burns can both affect supply, but they are not identical. Grayscale distinguishes buybacks, which can reduce the amount of a token in circulation, from burns, which permanently remove tokens from the total supply. New issuance and token unlocks can complicate the picture by introducing additional tokens that counteract some of these effects.

This distinction matters because a reduction in circulating supply does not automatically establish that a token is becoming more valuable. Investors must also consider the amount of revenue generated, the cost of distributions, the scale of repurchases and the quantity of new tokens entering the market.

Crypto token inflation is particularly relevant when assessing staking rewards. Staking compensates participants for committing assets to help secure or operate a blockchain network. Those rewards can provide an income stream, but their economic value depends partly on how much additional supply is created to fund them.

Ethereum illustrates the relationship between network participation and staking payouts. Validators receive rewards for participating in consensus, including proposing blocks and checking the work of other validators. They can also face penalties for failing to perform required duties, while slashing can apply in cases of specified misconduct.

These mechanisms connect rewards to network participation and performance. Nevertheless, the nominal rate of staking rewards does not, by itself, reveal whether a tokenholder’s position is improving in economic terms. The rate of new issuance, changes in market value and the broader token distribution structure also influence the outcome.

HYPE leads tokenholder yield as CAKE tops adjusted earnings yield

Grayscale’s published comparisons cover tokens included in the FTSE Grayscale Financials Crypto Sector that rank among the 100 largest assets by circulating market capitalization, with centralized projects excluded from the analysis.

In the 10-protocol comparison for tokenholder yield, Hyperliquid’s HYPE recorded the highest result at 8.0%, while CRV ranked last at -5.5%. For adjusted earnings yield, CAKE recorded the highest figure at 14.4%. The data were current as of October 20, 2026.

The results illustrate why different valuation measures can produce different rankings. A protocol may offer relatively strong tokenholder distributions without generating the highest adjusted earnings yield. Conversely, a protocol with stronger earnings relative to its market value may rank more favourably under the adjusted measure.

The distinction also highlights the limitations of comparing staking rates or buyback announcements in isolation. Such figures may describe a particular distribution mechanism but do not necessarily capture the effects of issuance, operating costs or circulating market capitalization.

Crypto token inflation can also vary considerably across projects. Some protocols distribute rewards through staking, while others rely on buybacks or combine several mechanisms. Token unlock schedules, changes in circulating supply and the sustainability of fee generation can further influence the results.

Bitcoin follows a different valuation approach

Grayscale treats Bitcoin differently from income-generating applications because Pandl’s analysis views the asset as a digital commodity and a decentralised alternative to fiat currencies.

Rather than applying the same earnings-based approach used for financial protocols, the firm argues that Bitcoin should be assessed as digital gold. Its valuation indicators have drawn on blockchain activity and historical benchmarks, reflecting Bitcoin’s different monetary role.

The distinction is important because Bitcoin does not operate like a conventional lending or trading application that generates fees and distributes earnings to tokenholders. Applying the same framework without accounting for these differences could produce misleading comparisons.

Grayscale has also examined relative valuations among digital currencies, including XRP and Zcash. In that analysis, the firm compared their market capitalizations with Bitcoin using 30-day averages to assess their relative scale within its digital currency sector.