Staked Ethereum Reaches 27% of Supply Ahead of ETF Trading

  • Renowned Ethereum researcher Evan Van Ness said that “we definitely don’t need this much ETH staked.”
  • Currently, more than 27 percent of the Ethereum supply is being staked.
  • Staking’s growth has raised questions about centralized companies managing a large amount of ETH.
  • Because of regulatory concerns, U.S. providers of spot Ethereum ETFs will not be able to stake their ETH.

According to the most recent data from Coinbase, a whopping 32.6 million ETH—more than 27% of the entire supply—are currently being used to secure Ethereum’s proof-of-stake network, as the cryptocurrency market excitedly awaits the possible introduction of spot Ethereum ETFs in the United States.

This significant achievement highlights the increasing interest in Ethereum staking, despite the ecosystem’s ongoing concerns about the arrival of the much anticipated Ethereum ETFs. 

Regulatory restrictions will prevent the new exchange-traded funds from staking their holdings, unlike their underlying asset.

Staked ETH has been increasing steadily, with the exception of a little lull in the spring of 2023 after the Shanghai upgrade. In the midst of increased market volatility, Ethereum is currently trading slightly below $3,000, down 14% over the previous week.

The approval procedure for Ethereum ETFs by the SEC has taken longer than anticipated. We believe these things might potentially list later next week or the week of the 15th at this time, according to Bloomberg ETF analyst James Seyffart, who posted on Twitter (also known as X).

This comes after Bitwise submitted an updated S-1 form before the deadline of July 8, which would mean that the goods are almost ready for release. Then, on Monday, VanEck submitted its own revised S-1.

Renowned Ethereum researcher Evan Van Ness provided analysis of the staking scenario. He said that since Ethereum proof-of-stake offers far greater economic security than proof-of-work, we really don’t need this much ETH staked.

He also issued a warning regarding the hazards associated with centralization: you are risking your Ethereum if your staking pool is operating on a majority client or in the cloud.

Traditional financial actors have responded creatively to ETFs’ incapacity to stake. The Information was informed by anonymous people with knowledge of the company that Franklin Templeton, which oversees $1.6 trillion in assets, intends to introduce a fund that will be centered on cryptocurrencies and staking rewards.

Purpose Investments, a Toronto-based company, already operates an Ethereum fund that is permitted to stake the underlying ETH.

According to a press release, he stated, “We’ve always been excited about Ethereum and what the technology and ecosystem represent.” An ETF is currently thought to be the most efficient solution; initially, a corporation structure was the best choice.

There are concerns over the ecosystem’s future raised by the surge of activity surrounding Ethereum staking and ETFs. The Ethereum community will be keenly observing these developments to see how they affect the security, decentralization, and general health of the network as more institutional entities venture into staking and the percentage of staked ETH rises.

At the EthStaker Staking Gathering last year, researcher Danny Ryan of the Ethereum Foundation discussed his ideas on staking economics. According to him, reward curves and general economic incentives included in the Ethereum protocol have an impact on staking. The objective is to build a safe, enduring structure that promotes involvement and upholds the integrity of the network.

As a result of the recent market correction, which has been linked to the impending Mt. Gox repayments and macroeconomic worries, Bitcoin dropped below $55,000 once more on Sunday. 

On Friday, it almost reached $54,000, the lowest level since late February. The intricate relationship between staking patterns, ETF expectations, and larger market dynamics is highlighted by this volatility.

For the time being, the huge staking milestone is evidence of the growing belief among ETH holders that staking is the way of the future. It’s still unclear if this future will be shaped by a new wave of staking-focused funds and companies, or if it will directly include ETFs. 

The stage is set for a potentially game-changing moment in Ethereum’s history as the cryptocurrency community waits impatiently for the SEC’s final ruling.

Disclaimer : This article was created for informational purposes only and should not be taken as investment advice. An asset’s past performance does not predict its future returns. Before making an investment, please conduct your own research, as digital assets like cryptocurrencies are highly risky and volatile financial instruments.

Author: Puskar Pande

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