Ethereum enthusiasts may be facing challenges in gaining momentum at present, but intriguing onchain developments are unfolding. As Ethereum (ETH) trades above $2,400, yet is restrained by persistent sellers, data from IntoTheBlock reveals that nearly 30% of all circulating ETH has been staked. This signals significant engagement from the community and hints at potential long-term stability.
Over 34.4 Million ETH Staked in the Past Nine Months
As of October 8, analysts at IntoTheBlock have observed that approximately 28.9% of all ETH has been staked. This marks a substantial increase from the 23.8% recorded in January 2024. A noteworthy portion, over 15.3% of ETH, has been staked for more than three years, highlighting the confidence of holders in Ethereum’s future.
Following Ethereum’s transition from a proof-of-work consensus mechanism to a proof-of-stake network in September 2022, the platform has seen a shift from energy-intensive miners to validators. This transition mirrors the approach taken by other blockchain networks like Cardano.
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Parallel data reveals that over 1 million network validators have collectively locked in excess of 34.4 million ETH. Each validator earns an annual percentage rate (APR) of 3.3%, which is a non-compounding yield. The yield tends to decrease as more ETH is locked, maintaining a balance in the ecosystem.
Validators must lock a minimum of 32 ETH and operate a node that ensures the network’s continuous operation. There are strict penalties for validators found colluding or engaging in activities that threaten the network’s security, such as confirming invalid transactions or attempting a majority attack.
The continuous addition of validators, even as Ethereum’s price has retracted from Q1 2024 highs of around $4,100 to lows of $2,100 in early August, is a testament to the platform’s robust long-term prospects. Ethereum continues to be the second-largest platform after Bitcoin and the only other crypto project to receive a nod for a spot ETF from the United States SEC. However, ETH remains under pressure, with prices struggling to break above $2,800.
EIP 7781: Aiming to Enhance Ethereum’s Scalability
Beyond staking achievements, Ethereum’s development team remains focused on improving user experience and enhancing scalability. Following the Dencun upgrade in March 2024, a new Ethereum Improvement Proposal, EIP 7781, has been introduced.
This proposal aims to significantly boost Ethereum’s processing speeds by reducing slot times and increasing the blob capacity. The goal is to reduce the slot time from approximately 12 seconds to 8 seconds, potentially increasing transaction throughput by over 30%. If implemented, decentralized exchanges like Curve and Uniswap stand to gain from enhanced performance and reduced transaction costs.
While the proposal is welcomed by the community, solo stakers may need to invest in new equipment and improve their internet connections to fully capitalize on the expected changes.
In conclusion, Ethereum’s ongoing developments in staking and scalability reflect its commitment to enhancing the network’s robustness and user experience. These advancements not only strengthen Ethereum’s position in the crypto landscape but also pave the way for broader adoption and utility.
