The amount of Ethereum (ETH) staked in smart contracts has seen an impressive jump despite the withdrawal allowance ushered in by the Shapella Upgrade.
According to data insight shared by Ki Young Ju, the CEO of CryptoQuant, the Ethereum locked-on staking protocols now stand at 24% of the total supply. Data from CryptoQuant puts this figure at 29.02 million tokens. According to Ki Young Ji, of the Ethereum tokens staked, only 11% are locked on exchanges
Ethereum and Staking Embrace: The Journey
The Ethereum network started as the first smart contracts platform in the crypto ecosystem but as a Proof of Work (PoW) blockchain that employs miners to validate transactions.
To reduce its Carbon footprint and chart a better path for scalability, it transitioned to Proof-of-Stake (PoS) through The Merge event.
As a result, the network pivoted to the staking mechanism for transaction validation. In the early days of the completed transition, Stakers were unable to withdraw their assets, a bottleneck that was solved with the Shapella Upgrade that was ushered in on April 12, 2023.
With this upgrade, withdrawals of locked Ethereum were anticipated and Ki Young Ju noted how he expected significant unstaking activities following the Shapella Upgrade. However, the ETH lock-up kept increasing, as has been historically showcased before.
One interesting trend in the staking chart as seen on CryptoQuant is that the lock-up of Ethereum has grown over time irrespective of the slump in the price of ETH.
For instance, from March 29, 2022, to June 16 of the same year, the price dropped from $3,401 to $1,067, and the percentage of staked Ethereum grew from 9.56% to 11.38%.
Is Ethereum Staking Paying Off?
Locking Ethereum through staking helps secure the protocol and aid its growth over time. To keep the system sustainable and attractive, the stakers are incentivized.
According to Ki Young Ju, Ethereum stakers are currently enjoying a 25% profit, as the current price of Ethereum, which stands at $2,519, surpasses the realized price for staking inflows, at $2,014.
$ETH realized price for staking inflows is $2,014, with the current price at $2,519, marking a 25% profit.https://t.co/QgrxWi40vF pic.twitter.com/NDMQrGz8gz
— Ki Young Ju (@ki_young_ju) January 18, 2024
The Ethereum Staking profitability stems from the growth in the price of ETH from $1,891.95 as of the activation of the Shapella Upgrade to $2,532.40 at the time of writing. Ethereum’s market cap is down 0.98% to $303,564,797,511 while trading volume has plunged 13.08% to $9,959,822,893.