Since the implementation of the Shapella or Shanghai upgrade on Ethereum on April 12, interest in staking ether ($ETH) and earning passive yield has experienced a significant surge. Data provided by Glassnode reveals that over 4.4 million coins have been deposited into the staking contract since April 12, bringing the total tally to 22.58 million.
Analysts at Bitfinex suggest that the increased demand for staking likely stems from large ether holders who prefer to retain their holdings and generate passive income instead of liquidating. They anticipate this trend to continue, especially considering the deflationary forces expected to drive up the price of ether.
Despite a waiting time of over one month, the demand for staking has continued to rise. As of now, ether holders interested in becoming network validators would have to wait for 36 days, according to data from wenmerge.com. Over 50,000 potential validators are currently in the queue. Staking ether currently offers an annualized yield of 4% to 5%.
Validators, responsible for processing transactions and storing data on the blockchain, are required to deposit a minimum of 32 $ETH. Many ether owners have chosen to establish themselves as network validators, enticed by the annual yield of approximately 4-5% through token staking.
The introduction of the Shapella upgrade has played a significant role in de-risking staking as a passive investment strategy. Prior to this upgrade, stakers were unable to withdraw their locked coins at will, leaving them exposed to fluctuations in the price of ether. However, the Shapella upgrade now allows users to unlock their coins whenever they choose.
Bitfinex’s analysts noted that the recently enabled withdrawal flexibility in $ETH staking, made possible by the Shapella upgrade, has reduced perceived risks for many investors. Previously, potential stakeholders may have been deterred from staking their $ETH tokens due to concerns about their funds being locked for an extended period.
Although the increased demand for staking has not yet resulted in a sustained bull run for ether, the cryptocurrency experienced an 11.5% rise to $2,140 in the four days following the Shapella upgrade. However, it has since retraced to trade at $1,850 at the time of writing.
The surge in staked ether demonstrates the growing interest in passive yield opportunities within the Ethereum ecosystem. As more investors embrace staking, it contributes to the overall development and maturation of the blockchain industry, paving the way for a more robust and sustainable future.
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. This is a news article only.
