The activation of the Merge upgrade, introducing the Proof-of-Stake (PoS) mechanism to Ethereum, occurred nearly a year ago. Six months ago, the Ethereum Shapella upgrade allowed for staked ETH withdrawals. These monumental changes have led to the emergence of the Ethereum staking industry, which currently holds over $40 billion worth of staked assets and has generated more than $1.6 billion in staking rewards.
This article is part of CoinDesk’s Staking Week.
Growing Institutional Interest in Ethereum Staking
The transition to Ethereum PoS has been an undeniable success. Currently, $41.5 billion worth of ETH is staked, accounting for 46% of staked assets across all blockchains. Staked ETH now represents 21.7% of the total supply, a significant increase from 6.5% when the Merge was activated. Institutional investors have taken notice of this trend.
Will Ethereum Staking Fervor Slow Down?
Though the Ethereum staking adoption rate has been impressive, it still lags behind other PoS networks like Solana and Cardano. However, the number of validators waiting to stake their ETH has been declining. This slowdown may be attributed to changing macroeconomic conditions that have affected crypto yield generation.
Another concern is the dominance of the leading staking provider, Lido, which controls nearly a third of the total staked ETH. However, steps are being taken to address this concern and further decentralize network control.
The Future of Ethereum Staking
Despite the challenges, Ethereum staking is expected to continue gaining momentum. Institutional investors now have access to seamless staking platforms tailored to their needs. Furthermore, the industry is witnessing the emergence of new use cases for staked assets in DeFi, such as sophisticated interest rate trading.
The long-term prospects for the Ethereum staking industry are promising, marking 2023 as the year of growth and transformation.
Disclaimer: The views and opinions expressed in this article are solely those of the author and do not necessarily reflect those of Nasdaq, Inc.