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

Ethereum bulls might struggle for momentum at press time, but other onchain data points to interesting developments. While ETH is trading above $2,400 but capped by determined sellers, IntoTheBlock data shows that nearly 30% of all circulating ETH 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.

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Ethereum switched the proof-of-work consensus algorithm in September 2022, officially transitioning to a proof-of-stake network like Cardano. The migration permitted the platform to do away with energy-intensive miners who were replaced by validators.

Parallel data from Ethereum shows that over 1 million network validators have cumulatively locked in more than 34.4 million ETH. Each validator earns an APR of 3.3%, a non-compounding annual yield that falls depending on the amount locked.

All network validators must lock at least 32 ETH and operate a node that ensures the network operates every day of the week without downtime. There are penalties for validators who collude to, for example, confirm invalid transactions or attempt to take over the chain in a majority attack.

That Ethereum is attracting more validators despite prices contracting from Q1 2024 highs of around $4,100 to as low as $2,100 in early August is an endorsement of the platform’s long-term prospects.

Presently, Ethereum remains the second largest platform after Bitcoin and the only other crypto project after Bitcoin to get the node for a spot ETF from the United States SEC. Even so, ETH remains under pressure below $2,800, dashing hope.

EIP 7781 Seeks To Boost Ethereum Scalability

Beyond this, Ethereum developers continue to build, looking to enhance user experience and improve scalability. After the Dencun upgrade in March 2024, a new Ethereum Improvement Proposal (EIP) 7781 was recently floated.

The proposer seeks to further boost Ethereum’s processing speeds by reducing slot times and increasing the blob capacity. Specifically, the goal is to eventually reduce the slot time from around 12 seconds to 8 seconds, which could increase the transaction throughput by over 30%.

If this proposal goes through, decentralized exchanges, including Curve or Uniswap, would benefit. Of note is that users, due to higher throughput, will see the cost of mainnet transactions shrink. Although the proposal is welcomed, solo stakers must acquire new gear and strengthen their internet connections.

Feature image from Canva, chart from TradingView