
Unlocking Riches: The Ultimate Guide to Ethereum Staking
<div data-submodule-name="composer-content">
<div>
<p>Ethereum stands as the predominant proof-of-stake network in terms of market capitalization. As of now, approximately <u>32.5 million</u> ETH, valued at roughly $99 billion, is staked. This represents a 78% increase since the Ethereum <u>Shanghai Upgrade</u> in April 2023.</p>
</div>
<div>
<p>Despite this significant growth, only <u>27%</u> of Ethereum's circulating supply is staked. In contrast, other proof-of-stake networks like Solana, Cardano, SUI, Avalanche, and Aptos boast much higher staking ratios, ranging from <u>48% to 81%</u>.</p>
</div>
<div>
<p>This indicates potential for further expansion in Ethereum staking, especially with the increasing adoption of Liquid Staking and Liquid Restaking Tokens on Layer 2 networks and decentralized finance (DeFi) protocols.</p>
</div>
<div>
<p><b>Stay Updated</b><b> with </b><b>Crypto Long & Short</b><b>, our weekly newsletter offering insights, analysis, and news crafted for the professional investor.</b><b> Subscribe here</b><b> to receive it in your inbox every Wednesday.</b></p>
</div>
<div>
<figure>
<picture>
<source media="(min-width: 1024px)" type="image/webp">
<source media="(min-width: 1024px)" type="image/png">
<source media="(min-width: 600px) and (max-width: 1023px)" type="image/webp">
<source media="(min-width: 600px) and (max-width: 1023px)" type="image/png">
<source media="(max-width: 599px)" type="image/webp">
<source media="(max-width: 599px)" type="image/png">
</picture>
<figcaption tabindex="0">
<span></span>
</figcaption>
</figure>
</div>
<div>
<p><i>Source: 21co on Dune Analytics</i></p>
</div>
<div>
<p><i><b>EIP 7251: A Step Towards Improved Staking Efficiency</b></i></p>
</div>
<div>
<p>The upcoming Ethereum upgrade, Pectra, is projected to occur by late 2024 or early 2025. Among the key features is EIP 7251, which aims to enhance the user experience for validators by increasing the maximum effective balance from 32 ETH to 2048 ETH. Major staking service providers, such as Coinbase, currently manage over <u>130,000</u> validators. This increase will allow them to consolidate their validators, thereby boosting operational efficiency and reducing costs.</p>
</div>
<div>
<p>Additionally, solo stakers will benefit from automatic compounding of their staking rewards. Presently, rewards for solo stakers are automatically issued to the execution layer, where they no longer generate staking yield. Solo stakers must wait until they have accumulated 32 ETH to activate a new validator and start earning rewards again.</p>
</div>
<div>
<p><i><b>Restaking: A New Growth Catalyst</b></i></p>
</div>
<div>
<p>Restaking has emerged as a promising development in the Ethereum ecosystem. With initiatives from platforms like EigenLayer and liquid restaking protocols, there is a rising interest in ETH staking. In March and April 2024, liquid staking protocols accounted for 38% and 48% of staking volumes, respectively.</p>
</div>
<div>
<p>Notably, over <u>65%</u> ($9.7 billion) of EigenLayer's total value locked (TVL) consists of native ETH, highlighting the significant impact of restaking. As restaking solutions become more mature and widely adopted, it is anticipated that they will contribute even more to staking volumes in the future.</p>
</div>
<div>
<p>However, it’s crucial to recognize that restaking entails risks, including potential issues with smart contracts and the reliability of the validating services. Since the reward and slashing mechanisms of EigenLayer have yet to be fully activated, the complete effects—both positive and negative—of restaking are still to be seen.</p>
</div>
<div>
<figure>
<picture>
<source media="(min-width: 1024px)" type="image/webp">
<source media="(min-width: 1024px)" type="image/png">
<source media="(min-width: 600px) and (max-width: 1023px)" type="image/webp">
<source media="(min-width: 600px) and (max-width: 1023px)" type="image/png">
<source media="(max-width: 599px)" type="image/webp">
<source media="(max-width: 599px)" type="image/png">
</picture>
<figcaption tabindex="0">
<span></span>
</figcaption>
</figure>
</div>
<div>
<p><i>Source: 21co on Dune Analytics</i></p>
</div>
<div>
<p><i><b>Note: The opinions expressed in this article are those of the author and do not necessarily reflect the views of the publisher or its affiliates.</b></i></p>
</div>
</div>