TLDR

  • For the first time in its history, Ethereum’s staking contract now holds more than 50% of the total ETH supply.
  • Roughly 37 million ETH is currently staked, accounting for 30% of the total 121.4 million ETH supply.
  • The staking address functions as a one-way vault, temporarily locking up ETH to aid in securing the network.
  • Over time, the staking vault accumulates ETH, causing its portion of the supply to seem larger.
  • The validator entry queue has hit record levels, with 3.9 million ETH waiting to be staked.

For the first time, Ethereum’s staking contract now holds more than 50% of the total supply. On-chain analytics provider Santiment notes this as a significant shift. Yet, there is some confusion about how the staking address operates, with key factors affecting the perceived rise in Ether locked within the contract.

Ethereum Staking Contract Holds 50% of ETH Supply

Santiment states that Ethereum’s proof-of-stake contract address has exceeded 50% of the total Ether supply. The Ethereum network’s staking contract currently holds over 37 million ETH, which is 30% of the total 121.4 million Ether tokens. Even so, the actual percentage of staked Ether varies depending on whether coins are counted before or after being burned.

The staking contract serves as a one-way vault, temporarily locking Ether to secure the network. Once staked, Ether cannot be spent or traded until the validator withdraws it. Santiment explained that when validators exit, the staked Ether is released as newly issued coins instead of being directly taken from the vault.

When Ether is staked, it enters a contract that takes it out of circulation. The contract then holds it, preventing any trading or spending during that time. Santiment clarified that this system results in an accumulation of Ether in the staking vault, creating the appearance that the staking contract holds a larger share of the total supply.

This growth in the contract’s share stems from how the system manages the release of coins. As more Ether is issued and burned over time, the percentage of staked Ether continues to climb. Santiment also noted that this trend is likely to persist, particularly during bear markets or periods of low trading activity.

Staking Demand Soars Amid Bear Market

Santiment observed a surge in staking demand, with the validator entry queue approaching record highs. Around 3.9 million ETH is waiting to be staked, with a wait time of 67 days. This growth occurs despite Ethereum’s price recently dropping below $2,000, driven by panic selling among retail traders.

Analysts, such as Merlijn The Trader, noted that Ethereum might be viewed as “boring” in the current market.

Despite the low price, this period might be critical for building positions as staking demand rises. Ethereum’s staking contract is anticipated to keep growing, particularly as more coins are locked during times of market stagnation.