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Ethereum staking continues to go up – What does it mean?

TL;DR

  • The amount of ETH being staked is increasing, with investors locking up capital to earn virtually risk-free yields of 4 to 5%.
  • Ethereum’s Shanghai upgrade led to a record-breaking inflow of ether deposits for staking, with 571,950 ETH tokens deposited into staking contracts.
  • Binance introduced Wrapped Beacon ETH (WBETH) to provide users more flexibility when using their staked ETH in DeFi protocols.

The amount of Ethereum being staked has been steadily increasing, with large amounts of capital being locked up to earn 4 to 5% yields in ETH, which are virtually risk-free.

These yields are paid from transaction fees, rather than from new issuances of ETH, preventing the dilution of ETH. This trend of ETH staking growth has potential implications for the cryptocurrency ecosystem and its users.

Record-breaking inflows and institutional staking

Ethereum’s Shanghai upgrade, also known as Shapella, brought a record-breaking weekly inflow of Ethereum (ETH) deposits for staking. Investors deposited around 571,950 ETH tokens into staking contracts, worth over $1 billion, according to Dune Analytics data.

This marked the largest weekly token inflow in ether staking’s nearly two-and-a-half-year history. The top five institutional-grade staking service providers, including Bitcoin Suisse, Figment, Kiln, Staked.us, and Stakefish, staked a combined total of 235,330 ETH, worth around $450 million, since the Shanghai upgrade went live.

Binance introduces Wrapped Beacon Ethereum (WBETH)

To provide users with more flexibility in using their staked ETH in DeFi protocols, Binance introduced a new token called Wrapped Beacon ETH (WBETH).

The WBETH service allows users to wrap their BETH into the new tokens at an initial conversion rate of 1:1, though this rate may change. By using WBETH, users can do more with their staked ETH while still receiving rewards.

Although currently only Ethereum and BNB Smart Chain are supported, Binance plans to support more networks in the future.

Following the Shapella upgrade, liquid staking of ETH remains strong, with Lido dominating the niche, holding 74.2% of the total share and over 6.1 million ETH staked.

Coinbase’s liquid ETH staking comes second with approximately 1.1 million staked ETH, amounting to 13.84% of the market share.

The rise in ETH staking indicates increased confidence in Ethereum’s long-term prospects and an appetite for earning passive income through virtually risk-free yields.

As the Ethereum ecosystem continues to evolve and mature, the growth in staking activity may contribute to further network stability and development.

Disclaimer: The information provided is not trading advice. Cryptopolitan.com holds no liability for any investments made based on the information provided on this page. We strongly recommend independent research and/or consultation with a qualified professional before making any investment decision.

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Jai Hamid

Jai Hamid is a passionate writer with a keen interest in blockchain technology, the global economy, and literature. She dedicates most of her time to exploring the transformative potential of crypto and the dynamics of worldwide economic trends.

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