- Ethereum’s staking market cap has reached a new all-time high of $65.45 billion.
- The liquid supply of ETH has decreased over the last two years, indicating a shift towards long-term investment strategies.
Ethereum Staking: A Surge in Popularity and Value
Ethereum (ETH), a leading player in the blockchain arena, has witnessed a remarkable surge in its staking activities, with the total supply locked in ETH’s deposit contract reaching a fresh all-time high. This development represents not only a significant milestone for Ethereum but also a changing landscape in cryptocurrency investments.
A Quarter of ETH Circulating Supply Now Staked
As per AMBCrypto’s analysis of CryptoQuant data, approximately 29.39 million ETH coins are currently staked on the blockchain, comprising nearly a quarter of Ethereum‘s total circulating supply. This substantial amount of staked ETH, valued at $65.45 billion, accounts for about 35% of the total market cap of all proof-of-stake (PoS) assets. This is a testament to the growing confidence and interest in Ethereum’s staking mechanism.
The Shapella Upgrade: A Catalyst for Staking
The increase in Ethereum staking can be traced back to the Shapella Upgrade introduced last April. This upgrade, which allowed for the unlocking of staked ETH, has significantly boosted staking activities. Since the Shapella Upgrade, the ETH staked supply has jumped by 55%. Interestingly, this increase has occurred independently of ETH’s price performance, indicating a stronger focus on staking as a viable investment strategy.
Challenges Ahead: Diminishing Staking Yields
Despite its popularity, Ethereum staking faces the challenge of diminishing returns. According to Staking Rewards data, the annualized average reward rate has declined from 5% at the beginning of January to 3.54%, a consequence of the increasing amount of ETH staked and the number of participants involved. The long-term sustainability of the staking rate remains to be seen as yields continue to fall.
ETH: A Long-Term Investment Asset?
One notable trend observed by CryptoQuant is the decline in ETH’s liquid supply, which is typically used for active trading. This shift from trading to staking suggests that Ethereum is increasingly being viewed as a long-term investment asset, rather than a short-term trading opportunity. With a rotation of capital from trading to staking, Ethereum is solidifying its position as a key asset in the portfolios of those seeking stable, long-term returns.
In conclusion, Ethereum‘s record-breaking staking figures represent a pivotal moment in the cryptocurrency world, highlighting a shift in investment strategies towards more stable, long-term assets.