The future is staking.
This is a transition that people are going to make. Like always, some will see the potential earlier than others. In fact, most will be late to the Party.
Nevertheless, staking income is going to become crucial for people around the world. Here is where I think we see a massive shift from our present financial system. Web 3.0 offers the ability for all to participate in this. As things expand, the more opportunities that will present themselves.
Tokenization is a powerful mechanism. We are only starting to realize what can be done. Because it is new, experimentation is occurring. This means there will be some failed paths. Of course, nothing happens financially in a straight line. The same is true for technology.
Web 3.0 is combining the two together.
Image by Ideogram
To me, Web 3.0 will allow everyone to do what the wealthy and major financial institutions are presently doing.
The financial media talks a great deal about the stock market. Unfortunately, while the average person is draw to the excitement of the ups and downs, making money isn't designed to fill an adrenaline rush. Instead, it is based upon producing sound returns.
It is what money management is all about.
We often hear about the hunt for yield. This is what money managers are rated upon. It often can come from speculation although that is not how the largest players make their money.
For this reason, we have to look at the totality of what takes place.
To start, the bond market is much larger than equities. Here is where people get a yield based upon the coupon. The idea, for the most part, is not to speculate. It is why insurance companies and pension funds tend to be the largest buyers of bonds.
Then we have private equity along with venture capital. These tend to be a bit riskier but they are focusing upon companies. These entities are not speculating on price moves as much as the success of a company.
Finally there are people like Elon Musk, Jeff Bezos, and Phil Knight. These people amass huge wealth through their building of companies. Of course, they can take shareholders along for the ride, enriching them along the way. Here is where long term stock market players, ala Warren Buffett can amass a fortune.
All of this can be encompassed through staking.
In the past we discussed the idea of AI, robotics, and how automation could end up destroying a lot of jobs. This is not a novel outlook as many are talking about this same potential.
What is the solution? Here is where things go off the rails since nobody has a guaranteed solution.
In my view, staking income is, for many people, going to replace labor income. As people start to gravitate towards tokenization, staking becomes crucial. It provides a lot of benefits for both the individual and the initiatives.
This is also where people can start to focus upon returns.
Therefore, someone who is earning $50K, in the United States, with enough assets, could end up replacing that completely through staking. Of course, it will require having enough assets, something that could be aided by prices rising due to success.
One of the keys is how these initiatives are monetized.
We all know that come VC firms get major paydays. How would you like to enjoy similar results?
Whenever a company is going public, the early investors get an enormous return. This is where their success comes from. Naturally, not every investment ends up with the major windfall. Many are complete losses. That is the nature of the system.
Nevertheless, when something like Coinbase hits the open market, huge sums of money were made by the early players. In fact, much of the gains were already enjoyed.
The reality is that, even if we have the money, most of us are excluded from this system. We are barred from participating.
But wait, it gets worse.
When companies go public, we have to wait until the stock actually starts trading. Wall Street entities often are given a piece of the offering to sell to their clients at a set price, often times below what the opening price is. These people can often earn a quick profit.
And we are left waiting.
Tokenization allows us to all become venture capitalists. We can invest in whatever we see that sparks out interest.
Would you like to own a piece of 100 robotaxis in different cities throughout the United States? Tokenization could offer this.
How about having a piece of a local restaurant or grocery store? Again, this is possible.
Want a piece of a video streaming platform? Done.
An online sports team? No problem.
A piece of the royalties from someone's song? Tokenize it.
The point is, large or small, we can do the same thing Wall Street does and open it up to everyone. Blockchain already has some of this in place as we see different forms of staking being experimented with. For example, Hive allows for people to stake their coins, which gives them access to the chain. At the same time, there is an inflation adjustment that is paid to those staking. Finally, a return can be generated by curating content.
It is a system that can be further enhanced by delegating those abilities to a project, in return for the tokens they are offering.
This is just one example.
What does this look like after years of innovation?
As stated, we are still in the early stages of experimentation. Over the next few years, as more ventures are created, people will toy with other models. Staking offers enormous potential due to its flexibility. This can take place using value capture tokens or stablecoins. It can even apply to non-fungible tokens (NFTs).
Consider a time when there will be thousands of initiatives following this path. Naturally, no one person can follow that many opportunities. That said, we could find a handful to do a deep dive on and follow closely.
The power of compounding will become available to everyone. We are going to find many of these ventures are passive. We can get involved and simply see the payouts in our wallets. Monitoring the situation is always required but it will be minimal in terms of time. I have a few that are already like that.
Whatever opportunities are available today, this will pale in comparison to where we will be in a 3-5 years. Over time, Web 3.0 keeps growing, with more coming online.
Here is where people who are acquiring assets can benefit. It is also why asset accumulation should be the focus. As that is done, the choices available to be grows.
