The Ethereum network recently passed a new staking milestone. On August 17, the Ethereum 2.0 staking contract surpassed Wrapped Ether as the single largest holder of Ether (ETH) (WETH). According to Etherscan statistics, the Eth2 deposit contract now contains almost 7.14 million Ether coins worth $23 billion at the time of writing.
This accounts for approximately 6.1 percent of all Ether tokens in circulation, implying that Ethereum’s staking rate has risen above 6%. Wrapped Ether deposit contract ranks second, with 6.97 million tokens — 5.94 percent of total Ether. According to Beaconcha.in, there are presently 217,354 validators on the Ethereum network.
As a result, Ether is now the third most staked cryptocurrency. According to Staking Rewards data, the Ethereum 2.0 deposit contract ranks third, only behind Cardano and Solana, both of which have been proof-of-stake (PoS) blockchains since their inception. In comparison to the $23 billion in ETH staked, nearly $26 billion in SOL and $63 billion in ADA are staked on their respective networks.
Pete Humiston, manager of Kraken Intelligence, the Kraken exchange’s research department, explained the various blockchains: “Ether’s market cap is well over $350 billion: many multiples above both Solana and Cardano. SOL and ADA may well have a larger share staked compared to the 5.7% of ETH on ETH 2.0, but the sheer size of Ethereum means it is all but inevitable it will surpass both as ETH 2.0 continues apace.”
This staking milestone for Ethereum comes on the heels of the London hard fork, a critical event in the blockchain’s evolution. The London update, which included the widely awaited Ethereum Improvement Proposal (EIP) 1559, as well as four other EIPs: EIP-3554, EIP-3541, EIP-3198, and EIP-3529, went live on the network on August 5.
EIP-1559 brought a change in the transaction pricing mechanism that eventually reduced the inflation rate of the token and decreased miners’ revenues from transaction fees. This upgrade is the penultimate step leading to the final merge of the Eth1 and Eth2 chains scheduled for 2022.
This price rise could result in a positive feedback loop, since a higher price could spur innovation and development within the ecosystem, leading to increased network utilisation and the burning of even more ETH under this EIP. Aside from the reduction in selling pressure on ETH in the short to medium term, which will lead to higher ETH prices, there are other factors to consider.