Data from blockchain analytics firm, Nansen, shows that over 30 million Ether ($ETH), which represents a quarter of all Ethereum (ETH) in circulation, is currently being staked.
The amount is equivalent to approximately $85 billion as per the current ETH price of ~$2,900. The world’s second largest cryptocurrency has outperformed Bitcoin in the last 2 weeks as the crypto market picked up, with ETH price gaining ~22.7% in that period.
25% of the ETH supply is now staked pic.twitter.com/YcZrE1ZOhV
— Lido (@LidoFinance) February 7, 2024
Staking involves ‘locking up’ digital coins or tokens to contribute to the operation of a blockchain network. In proof-of-stake systems like Ethereum (ETH), users pledge their coins to the network by sending them to a designated blockchain address. Participants in staking earn token rewards as incentives for their contribution to network security and integrity.
ETH Deposits vs Withdrawals in the last week according to NansenIn 2023, the Ethereum network underwent an upgrade (Shanghai/Shapella fork) enabling users to conveniently withdraw staked ETH. Subsequently, the market for liquid staking protocols has surged, enabling users to effortlessly lock up and withdraw their cryptocurrency holdings.
As Ethereum enthusiasts eagerly anticipate the approval of an exchange-traded fund (ETF) that would introduce the second-largest digital asset to Wall Street, applicants are integrating discussions about staking into their proposals. Recently, investment firm, Ark 21Shares, amended their spot ETH ETF S-1 to include references to staking practices.
“The sponsor may, from time to time, stake a portion of the trust’s assets through one or more trusted staking providers,” the filing read.
Staking has sparked controversy with regulators; the U.S. Securities and Exchange Commission (SEC) has in the past imposed fines on prominent crypto companies like digital asset exchanges, Kraken and Coinbase, for allegedly offering unregistered securities through staking services.
The Ethereum network is currently undergoing an upgrade as well. Developers recently completed the Dencun upgrade on a testnet, and it is anticipated to be implemented on the mainnet by March 13 2024.
Developers assert that Dencun will address the scalability issues of the network supporting the world’s second-largest cryptocurrency, which is currently slow and costly. With this upgrade, it is anticipated that the network will have the potential to process over 100,000 transactions per second in the future.
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