since the implementation of shanghai upgrade on the Ethereum mainnet just a month ago, which allowed Ethereum validators to withdraw all or part of their ether (ETH) token with staking smart contracts for the first time, demand for ETH staking has increased.
According to www.wenmerge.comETH owner waiting time to enter Ethereum As of a new validator, the network has grown to 27 days and 7 hours, with 50,398 potential validators in the queue.
ether Owners can set up as network validators and earn yields of around 4-5% annually through token staking.
ETH Staking has been available on the Beacon Chain since December 2020, but staking withdrawals were only enabled in last month’s upgrade.
Adding the flexibility of withdrawals to ETH staking reduces its risk in the eyes of many investors, who may have been held back for fear of losing their ETH tokens prior to the implementation of withdrawals, locking up their funds for a long period of time. will be given.
The increase in the number of validators queuing up to join the network comes hand in hand with an increase in the number of ETH tokens entering smart contracts.
As of Monday, the number of ETH tokens staked had grown to 21.652 million, an increase of nearly 3.5 million in a month since the Shanghai upgrade. glassnode data,
Considering that the total supply of ETH tokens was around 120.08 million, this means that the staking participation rate is now just over 18%.
This is up from nearly 15% prior to the upgrade, when the number of ETH tokens staked was approximately 18.1 million and the total supply of ETH tokens was approximately 120.4 million.
Double Deflationary Trend Providing Major ETH Price Tailwind
Competing proof-of-stake chains with flexible staking contract withdrawals like Cardano have staking rates in the 60-70% range.
While only no more than 50,000 ETH are allowed to be withdrawn from the staking contract each day, Ether staking is not fully flexible and thus may not be able to achieve a fairly high level of staking participation rates.
Let’s assume that the Ether staking participation rate reaches 50% – which could take less than a year, given that the participation rate is currently growing at around 3% per month.
This would mean that 38.4 million ETH tokens would move to less liquid ETH staking contracts.
Unstaked ETH tokens will suddenly become very scarce, which should be a tailwind for the price.
Now the fact that there is even a supply of ether rapid deflation,
According to glassnode dataThe recent spike in transaction fees as a result of network congestion related to Meme Coin has resulted in an increase in the ETH burn rate (essentially, the Ethereum network burns all ETH tokens that were used to pay transaction fees) goes back to August 2021 according to EIP1559) earlier this month saw the deflation rate of Ether exceed 8%.
supply deflation This should act as another major long-term tailwind for ETH price.