Ether staking surges after Shapella upgrade
23 May 2023
There has been a surge in staking Ether since the latest Shapella upgrade was carried out on the Ethereum network in April.
More than 4.4 million coins have been deposited into the staking contract since 12th April, bringing the total to 22.58 million, according to data monitored by Glassnode.
“The surge in demand for staking probably originates from large Ether holders, who prefer not to liquidate their holdings and instead seek to generate passive income,” according to analysts at Bitfinex within a weekly report shared with CoinDesk on Tuesday.
“This trend is anticipated to persist, particularly considering that deflationary forces are expected to propel the price of Ether significantly,” the analysts went on to say.
Staking demand has soared, despite waiting time of more than a month, as reported previously. Indeed, Ether holders aiming to become a validator on the network would need to wait 36 days, as per data from wenmerge.com.
As it stands, over 50,000 validators are waiting in the queue, CoinDesk reports, and at the time of writing, staking Ether offers an annualised yield of between 4% and 5%.
Validators are entities in charge of transaction processing and storing data on the blockchain, and are required to deposit at least 32 ETH.
Owners of Ether continue to be established as network validators, attracted by an annual yield of 4-5% via token staking, the CoinDesk report adds.
Staking began to gain popularity after Ethereum’s Beacon Chain went live back in December 2020. However, stakers were not unable to withdraw locked coins when they wished for three years, which meant they were exposed to price gyrations.
Yet the recent Shapella upgrade brought an end to this, permitting users to unlock their coins when they wanted.
According to Bitfinex analysts: “Prior to this upgrade, potential stakeholders may have been deterred from staking their ETH tokens due to concerns about their funds being locked for an unacceptably long duration.”
Following the Shapella upgrade, Ether increased by 11.5% to $2,140 within four days. Yet at the time of writing, the price of the world’s second largest cryptocurrency stood at $1,855.
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