Over 34.4 Million Or Nearly 30% Of All Circulating ETH Staked: Why Is Ethereum Still Struggling?

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As a seasoned researcher with a deep-rooted passion for the crypto world, I find myself continually intrigued by the developments unfolding within the Ethereum ecosystem. The staggering figure of over 34.4 million ETH staked within just nine months post-transition to proof-of-stake is nothing short of breathtaking.

At the moment, Ethereum‘s bullish force might be facing some resistance in terms of momentum, but other on-chain indicators suggest intriguing advancements. Although ETH is currently trading above $2,400, it seems to be held back by persistent sellers. However, data from IntoTheBlock reveals that approximately 30% of the total Ethereum supply has been staked.

Over 34.4 Million ETH Staked In 9 Months

As of October 8, IntoTheBlock analysts note that 28.9% of all ETH has been staked. At this level, more holders are committing to tie their stash. The figure is up, rising from 23.8% recorded in January 2024. More than 15.3% of ETH has been staked out of this amount for over three years.

In simple terms, Ethereum changed its method of validation from proof-of-work to proof-of-stake in September 2022, transforming into a network similar to Cardano. This transition allowed the platform to eliminate energy-consuming miners and instead rely on validators.

Data synchronized across Ethereum reveals that approximately 1 million network validators collectively have staked over 34.4 million Ether. Each validator receives an Annual Percentage Rate (APR) of 3.3%, which is a yearly, non-compounding return that decreases based on the amount locked in.

To function effectively within the network, each validator is required to securely deposit at least 32 Ether and consistently run a node that ensures smooth, round-the-clock operation without any interruptions. Violators who collude to validate illegal transactions or attempt a majority takeover of the chain risk incurring penalties.

Despite Ethereum’s price dropping from its Q1 2024 high of approximately $4,100 to as low as $2,100 in early August, the fact that it continues to attract more validators is a testament to the platform’s promising future.

At present, Ethereum maintains its position as the second most significant platform following Bitcoin, and it’s currently the only other cryptocurrency project beside Bitcoin to secure a node for a spot ETF from the U.S. Securities and Exchange Commission (SEC). However, despite these positive developments, Ethereum is experiencing pressure and is trading below $2,800, which has dampened optimism among investors.

EIP 7781 Seeks To Boost Ethereum Scalability

Moving forward, Ethereum programmers are persistently constructing solutions, aiming to elevate user experience and boost scalability. Following the Decun update in March 2024, a fresh Ethereum Improvement Proposal (EIP) known as 7781 has been proposed recently.

The individual aims to enhance the speed at which Ethereum processes transactions by shortening the duration of each processing interval (slot) and expanding the capacity for data storage (blob). Eventually, the slot time is planned to be decreased from approximately 12 seconds to 8 seconds, potentially boosting transaction throughput by more than 30%.

If this proposition gets approved, platforms like Curve and Uniswap (decentralized exchanges) stand to gain significantly. It’s worth mentioning that users will experience a reduction in the cost of mainnet transactions as a result of increased throughput. However, it’s important to note that solo stakers may need to invest in new equipment and improve their internet connections for this proposal to take effect. Despite this, the proposition is generally well-received.

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2024-10-09 02:41