Ethereum bulls may be struggling for momentum at the time of writing, but other onchain data points to interesting developments. While ETH is trading above $2,400 but capped by determined sellers, IntoTheBlock data shows that nearly 30% of all circulating ETH has been staked.
More than 34.4 million ETH staked in 9 months
As of October 8, analysts from IntoTheBlock report remark that 28.9% of all ETH has been staked. At this level, more holders commit to locking in their inventory. The figure has increased, up from 23.8% in January 2024. More than 15.3% of ETH has been invested from this amount for more than three years.
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Ethereum switched to the proof-of-work consensus algorithm in September 2022, officially moving to a proof-of-stake network like Cardano. The migration allowed the platform to do away with energy-intensive miners who were replaced by validators.
Ethereum parallel data shows that more than 1 million network validators have cumulatively committed more than 34.4 million ETH. Each validator earns an APR of 3.3%, a non-compounded annual yield that decreases depending on the amount locked.
All network validators must lock a minimum of 32 ETH and operate a node that ensures the network functions without downtime every day of the week. There are penalties for validators who conspire to confirm invalid transactions, for example, or attempt to take over the chain in a majority attack.
That Ethereum is attracting more validators, despite prices falling from Q1 2024 highs of around $4,100 to a low of $2,100 in early August, is a testament to the platform’s long-term prospects.
Currently, Ethereum remains the second largest platform after Bitcoin and the only other crypto project after Bitcoin to be the hub for one spot ETF of the US SEC. Still, ETH remains under pressure below $2,800, dashing hopes.
EIP 7781 attempts to increase the scalability of Ethereum
In addition, Ethereum developers continue to build, trying to improve the user experience and improve scalability. After the Dencun upgrade in March 2024, there is a new one Ethereum Enhancement Proposal (EIP) 7781 has recently been suggested.
The initiator is attempting to further increase Ethereum processing speeds by reducing slot times and increasing blob capacity. Specifically, the goal is to eventually reduce the closing time from around 12 seconds to 8 seconds, which could increase transaction throughput by more than 30%.
If this proposal goes through, decentralized exchanges including Curve or Uniswap would benefit. Notably, as a result of the higher throughput, users will see the costs of mainnet transactions drop. While the proposal is welcomed, solo strikers will need to purchase new equipment and strengthen their internet connections.
Feature image from Canva, chart from TradingView