April 19, 2024
Ether Staking Surpasses $85 Billion, Locking Up 25% of Circulating Supply
Altcoins News

Ether Staking Surpasses $85 Billion, Locking Up 25% of Circulating Supply

Amidst the surging demand for staking, the price of Ether (ETH) has notched up impressive gains, breaching the $2,800 threshold and hitting a new yearly high. The Beacon Chain, the backbone of Ethereum’s proof-of-stake (PoS) mechanism, now boasts a staggering 30,206,801 ETH locked up in staking contracts, equating to a whopping $85 billion. This represents nearly a quarter of the total circulating supply of Ethereum. Impressively, the number of active validators on the Beacon Chain has surged to 943,974, underlining the growing participation in Ethereum’s staking ecosystem.

In the month of February alone, investors poured in an additional 600,000 ETH into Ethereum 2.0 staking contracts, further fueling the bullish sentiment surrounding the network. These developments coincide with Ether’s price soaring to a yearly high, currently hovering around $2,774.

Source: Beacon Chain

The significance of a quarter of the circulating supply being locked in PoS contracts cannot be understated for Ethereum’s network. This surge in staked ETH not only enhances the network’s security and efficiency but also reduces the available supply of ETH for trading on exchanges. Consequently, this dwindling supply amid burgeoning demand could potentially drive up prices further.

The introduction of PoS to the Ethereum ecosystem via the Beacon Chain merger in September 2022 revolutionized the network, allowing validators to stake ETH and earn rewards. Currently, validators receive an annualized rewards rate of 4%. While initially starting with 21,063 validators, the Beacon Chain now boasts an impressive count of over 900,000 validators.

Critics had speculated about a surge in withdrawals following the Shanghai upgrade in April 2023, allowing validators to withdraw their staked ETH. However, the reality has been quite the opposite, with newly staked ETH outpacing withdrawals. This trend indicates that validators are opting to restake their ETH, enticed by the prospect of passive income.

As Ether’s price continues its upward trajectory, with sights set on breaching the $3,000 mark, attention is shifting towards the potential approval of spot Ether exchange-traded funds (ETFs) by the U.S. Securities and Exchange Commission (SEC). Approval of such ETFs could significantly impact Ethereum’s market dynamics, with institutional demand for ETH further diminishing the available supply and potentially propelling prices to new heights.

Image by Sallman Hayat from Pixabay

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