$85B Ether Staking Deposits: 25% Circulating Supply Locked

As of now, the total amount of Ether staked in the Beacon Chain has reached 30,206,801 ETH, which is valued at over $85 billion. This means that almost 25% of the total circulating supply of Ether is currently locked up in staking contracts. To support this, there are currently 943,974 active validators participating in the Beacon Chain.

The month of February has been a positive one for the Ethereum network, as investors have deposited an additional 600,000 ETH into Ethereum 2.0 staking contracts between February 1st and February 15th. The price of ETH has also experienced a surge, reaching new yearly highs above $2,800. At the moment, ETH is trading at $2,774.

Having a quarter of the circulating supply of ETH locked in proof-of-stake (PoS) contracts is seen as a positive sign for the Ethereum network. This increase in staked ETH contributes to the network’s security and efficiency, as it reduces the amount of ETH available for trading on exchanges. With a growing demand and a reduced supply, this creates a favorable market condition for ETH.

The Beacon Chain was introduced as a way to incorporate PoS into the Ethereum ecosystem. It was merged with the original Ethereum proof-of-work (PoW) chain in September 2022, allowing validators to stake their ETH. Currently, validators receive an annualized rewards rate of 4%. To become a validator, individuals must stake 32 ETH into the smart contract. Initially, there were 21,063 validators, but now there are over 900,000 validators.

After the Shanghai upgrade in April 2023, validators will have the option to withdraw their staked ETH. Initially, many critics were skeptical and believed that there would be a high demand for withdrawals from validators. Within a week of the upgrade, the number of staked ETH surpassed the number of withdrawals, indicating that validators were choosing to restake their ETH to continue earning passive income.

The price of ETH has been making significant gains in recent weeks and is close to reaching the $3,000 mark. With the approval of a spot Bitcoin exchange-traded fund (ETF), attention is now shifting towards spot ETH ETFs and whether they will also receive approval from the Securities and Exchange Commission. The introduction of spot ETH ETFs could create additional institutional demand for the second-largest cryptocurrency, further reducing market supply due to staking.