For the first time, the percentage of Ether supply staked on the Ethereum network exceeded a quarter of the supply.
This comes nearly a year after the Ethereum Shappera upgrade, which brought the Ether supply to over 30.1 million ETH (worth about $73 billion).
Including the Ether waiting to be staked in the network’s queue, the amount of ETH staked is over 25% of the supply, represented by 942,023 individual validator stakes.
Ether staking surges after Shappera
After Ethereum’s Shapella upgrade in April 2023, Ether staking exploded, giving users and validators the flexibility to withdraw their staked Ether on the network for the first time. Since the upgrade, he had a net flow of 10.25 million ETH staked.
The availability of liquid staking solutions like Lido and Rocket Pool also eased the process and contributed significantly to the increase. It is now possible to stake less than 32 ETH while unlocking the value of the staked asset for use as DeFi collateral.
However, the staking rewards on offer have been significantly reduced, and increased staking participation generally results in lower rewards per staker. Staking reward rates have fallen from a post-Chapella peak of 8.6% to less than 4% today.
Lido monopolizes Ether staking
Currently, Lido Finance's validators account for over 31% of ETH stakes, and the concentration of staked ether in a single service could potentially impact the decentralization and security of the network. Which brings me to my previous concerns.
However, similar to how miners switch mining pools on proof-of-work blockchains, users have the option to migrate to alternative staking solutions.
ETH staker. Image: Dune Analysis.
Following Lido, staking services provided by centralized cryptocurrency exchange Coinbase took second place, accounting for 14% of Ether staking, followed by Binance in third place with 4%.
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