This week, the amount of Ethereum (ETH) being staked reached a record high, signaling growing investor confidence and a reduction in the liquid supply of the world’s second-largest cryptocurrency.
According to data from Dune Analytics, over 35 million ETH is now staked within Ethereum’s proof-of-stake consensus mechanism. This represents more than 28.3% of the total ETH supply, which is now locked in smart contracts and unavailable for sale for a predetermined period, allowing holders to earn passive income.
The growing staking volume also indicates that a large portion of investors are choosing to hold their ETH rather than sell at current market prices. Over the first half of June alone, more than 500,000 ETH was staked—a trend that anonymous CryptoQuant analyst Onchainschool described as reflecting “rising confidence and a continued decline in liquid supply.”
Ethereum accumulation addresses, defined as wallets with no history of selling, have also reached a new all-time high of 22.8 million ETH. This suggests, according to the analyst, that Ethereum remains “one of the strongest crypto assets in terms of long-term fundamentals and investor conviction.”
US Regulatory Developments Support Staking Growth
The recent staking milestone coincides with a more favorable regulatory environment in the United States. The new record was set nearly three weeks after the Securities and Exchange Commission (SEC) released updated guidance on crypto staking, which was widely perceived as a win for the industry.
In a statement dated May 29, the SEC’s Division of Corporation Finance clarified that “protocol staking activities,” such as those involved in proof-of-stake blockchains, do not require registration under the Securities Act.
Despite this progress, the industry is still awaiting approval for the first Ethereum staking ETF. The SEC recently postponed a decision on Bitwise’s application to include staking functionality in its Ethereum ETF, indicating that further review is underway.
Leading Platforms in Ethereum Staking
Lido, a leading liquid staking protocol, accounts for approximately 25% of all staked Ethereum. Binance follows with 7.5%, and Coinbase holds 7.4% of the staked supply, according to Dune Analytics data.
Notably, as reported in March, Coinbase has emerged as the largest node operator on the Ethereum network, with its validators accounting for over 11.4% of staked ETH.
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Concerns and Institutional Adoption
Some decentralization advocates have expressed concerns about the growing dominance of liquid staking protocols, warning of potential centralization risks and single points of failure within the network.
Despite these criticisms, institutional participation in staking has grown significantly, thanks in part to improved liquid staking infrastructure. Konstantin Lomashuk, a founding contributor to Lido, noted that a considerable portion of the protocol’s total value locked (TVL) now comes from institutional participants, reflecting increased demand from this segment.
Frequently Asked Questions
What does staking Ethereum involve?
Staking involves locking up ETH in a smart contract to support the network’s security and operations. In return, stakers receive rewards, providing a form of passive income.
Why is the increase in staking significant?
Higher staking levels indicate stronger investor confidence and reduce the liquid supply of ETH, which can positively influence market dynamics and token valuation.
What are the risks associated with staking?
While generally considered low-risk, staking does involve locking funds for a set period, during which market conditions may change. There are also technical and slashing risks, though these are minimal with reputable providers.
How does liquid staking work?
Liquid staking protocols issue a derivative token (e.g., stETH) representing staked assets, allowing users to retain liquidity while still earning staking rewards.
Can US investors participate in Ethereum staking?
Yes, both individual and institutional investors in the US can stake ETH, especially through compliant platforms and services that adhere to regulatory guidelines.
What impact do ETF approvals have on staking?
The approval of a staking-enabled ETF would likely attract more institutional investors, further increasing staked amounts and potentially enhancing market stability.