Where Ethereum staking yield actually comes from

Ask what Ethereum staking pays and you will get a single percentage. That number is three unrelated revenue streams averaged together, and they respond to completely different things.

1. Issuance — the protocol's own payment

The consensus layer mints new ETH to reward validators for attesting and proposing. This component scales inversely with the square root of total stake: the more ETH staked, the less each validator earns. It is the only predictable piece, and it is the piece that shrinks as staking grows.

2. Priority fees — what users pay to skip the queue

Under EIP-1559 the base fee is burned; the priority fee ("tip") goes to whoever proposes the block. This tracks demand for blockspace, which means it is seasonal, spiky, and increasingly thin now that most activity has moved to rollups.

3. MEV — the uncomfortable one

Maximal extractable value is the profit available from ordering transactions advantageously: arbitrage, liquidations, and sandwiching. Through relays, a meaningful share of that flows back to proposers. It is real income, it is highly variable, and its ethical footing depends entirely on which subcategory you are looking at.

Why the headline number drifts

• More validators join → issuance yield falls.
• Activity migrates to L2 → priority fees fall.
• Volatility returns → MEV rises sharply, then subsides.

A quoted APR of, say, 3.1% might be 2.4% issuance, 0.3% tips and 0.4% MEV in a quiet month, and a very different mix in a volatile one. Comparing providers on the blended number alone tells you little about the risk you are taking.

What you are actually being paid for

Not for "locking up" ETH — that framing is borrowed from fixed income and it misleads. You are being paid to run infrastructure that can be penalised. Slashing risk, client-diversity risk, and in the case of liquid staking tokens, smart contract and depeg risk, are the actual cost side of the trade.