The average reward for crypto staking has surged to 450% higher than the average dividend paid to investors in the S&P 500, despite both markets experiencing robust growth.

On March 31, the S&P 500 registered its strongest first-quarter growth performance in five years, reaching 10.16%, according to Google Finance data. However, its average dividend yield rate of 1.35% was the lowest recorded since approximately two and a half years ago in Q4 2021.

This represents a difference of 0.23% from the all-time low of 1.12% observed 24 years ago during the first quarter of 2000. In contrast, crypto staking, which involves locking up cryptocurrency holdings to earn interest or rewards, currently offers an annual return average of 6.08%, as per the benchmark reward rate on Staking Rewards.

The S&P 500 dividend yield is calculated based on the average dividend payout of all individual stocks within the index. Among the three largest S&P 500 companies, Microsoft recorded the highest dividend yield of 0.71%, followed by Apple with 0.56%, and Nvidia Corp with 0.02%.

Among the top 100 cryptocurrencies, Algorand (ALGO) currently offers the highest staking reward rate of 84.19%, followed by Cosmos (ATOM) at 17.17% and Filecoin (FIL) at 16.34%. However, high-yield staking entails risks as assets are often locked up, potentially limiting investors' ability to liquidate in case of a decline in the underlying asset's value.

Institutional investors are increasingly recognizing the significant difference between crypto staking rewards and dividend yields. On March 30, Grayscale Investments launched an investment fund aimed at sophisticated clients to provide exposure to income generated from staking cryptocurrency tokens.

Grayscale's fund includes three PoS tokens: Osmosis (OSMO) with a 24% share, Solana (SOL) with 20%, and Polkadot (DOT) with 14%, while 43% is allocated to other tokens. Grayscale is among the asset management firms seeking approval from the US SEC, alongside Ark Invest and Fidelity Investments, to stake ETH as part of its Ethereum ETF fund, pending approval later this year.