Staking Ratio

The Staking Ratio in the context of staking is a metric that represents the proportion of the total token supply that is currently staked in comparison to the total supply that is eligible to be staked. It is expressed as a percentage and is calculated using the formula:

$Staking Ratio=(Staked Tokens / Eligible Supply)×100$

Where:

• Staked Tokens is the amount of tokens that are currently locked in staking contracts.

• Eligible Supply refers to the portion of the total token supply that can be staked. This may exclude tokens that are not yet in circulation, such as those still locked in vesting schedules, or tokens that are reserved for other purposes.

This metric is useful for understanding the level of participation in the staking process within a blockchain network. A higher staking ratio typically indicates a stronger commitment from token holders to the network, as a larger proportion of the total supply is being used to secure the network and/or generate staking rewards. Conversely, a lower staking ratio might suggest a lower level of commitment or a preference for liquidity over staking.

In the case of networks with governance mechanisms tied to staked tokens, the staking ratio can also be an indicator of the degree of decentralization or centralization in decision-making processes. For example, a high staking ratio with a diverse range of stakers could imply a more decentralized governance structure.