Ethereum Watch

• Ethereum’s staking market cap surged to $65.45 billion.
• ETH’s liquid supply has been going downhill over the last two years.

Ethereum [ETH] staking showed no signs of saturation as the total supply locked in ETH’s deposit contract surged to a fresh all-time high (ATH).

ETH staking on a roll

According to AMBCrypto’s analysis of CryptoQuant data, about 29.39 million ETH coins were staked on the blockchain as of this writing, equating to nearly a quarter of the total circulating supply.

With this, the total USD value of the staked coins surged to $65.45 billion, accounting for roughly 35% of the total market cap of all proof-of-stake (PoS) asserts, AMBCrypto discovered using data from Staking Rewards.

Users have shown heightened interest in staking since the Shapella Upgrade was introduced last April.

Staking, which was considered a risky proposition owing to withdrawal ambiguity, got a boost after the unlocking of ETH was permitted.

Indeed, ETH staked supply has jumped by 55% since Shapella.

An interesting aspect of the rise was how holders’ staking decisions became independent of ETH’s price performance. Note in the above graph how staked supply increased in January despite ETH’s drop.

Will depleting rewards stem the flow?

While ETH staking has grown in popularity over the months, it has reduced the staking yields, in pursuit of which users participated in the activity in the first place.

As seen from Staking Rewards data, the annualized average reward rate dipped from 5% at the beginning of January to 3.54% as of this writing.

However, this was expected as the rewards are inversely related to the amount of ETH deposited on the network and the number of stakers involved.

It remained to be seen if the staking rate would be sustained in the long run as the yields continue to fall.

However, one thing was clear — ETH holders were prioritizing guaranteed, stable returns over risk-laden market trading.

Is your portfolio green? Check out the ETH Profit Calculator

ETH’s perception changes drastically

ETH’s liquid supply, which is meant for active trading, has been going downhill over the last two years, according to CryptoQuant.

A rotation of capital from trading to staking implied that the second-largest cryptocurrency was being perceived as a long-term investment asset.

Source