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ETH Staking Overtakes Withdrawals for First Time Since Shapella Upgrade

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  • What – Ethereum staking has surpassed withdrawals for the first time since the Shapella upgrade on April 12. 
  • Why – The update aimed to improve the efficiency of the Ethereum network by reducing the amount of gas required to process transactions. 
  • What Next – As a result, more ETH has been staked than withdrawn from the Beacon Chain since the upgrade was implemented. 

According to the Token Unlocks dashboard, just over a million Ethereum has been withdrawn from the Beacon Chain following the Shapella upgrade, while 370,000 ETH has been deposited in the same period. 

This means that the staking balance has declined by 640,000 ETH, indicating that some unstaked ETH is going back into liquid staking platforms like Lido. 

The staked ETH balance on Lido has actually increased by around 100,000 since the Shapella upgrade and is now just over six million, valued at $12.6 billion. Furthermore, the Lido share of the total staked has increased to 34.7%, primarily because Lido has yet to enable withdrawals for users of the platform. 

Despite the increase in staked ETH, there are still 17.3 million ETH staked, valued at around $36 billion at current prices, according to the Nansen dashboard. The dashboard is showing a slowdown in the pace of ETH withdrawals, which fell to just 2,415 ETH on April 16, when there was 3,008 ETH deposited. 

Industry analyst Colin Wu reported that there is 892,000 ETH waiting to be withdrawn, citing Kraken regulatory factors and Huobi shareholders’ changes as the main sources of withdrawals. 

The US Securities and Exchange Commission (SEC) has cracked down on staking this year, targeting Kraken’s staking services first, and Coinbase could be its next victim. According to Nansen, Coinbase accounts for 12.8% of ETH depositors, with around 2.37 million ETH staked.

Ethereum prices have held above the $2,000 psychological barrier over the weekend, hitting a new 2023 peak of $2,129 during the Monday morning Asian trading session but have retreated slightly since. 

At the time of writing, ETH was trading at $2,098, holding on to last week’s gains. The asset has made an impressive 75% since the beginning of the year and could be leading markets into a new “altseason.” Total market capitalization has remained steady over the past 24 hours at $1.32 trillion. ETH staking has been growing in popularity in recent months, with more and more investors choosing to lock up their ETH in order to earn rewards. The process involves depositing ETH in a smart contract on the ETH network, where it is then locked up and used to validate transactions on the network.

In exchange for this service, stakers receive rewards in the form of newly minted ETH. The Shapella upgrade was designed to make this process more efficient, by reducing the amount of gas required to process transactions. 

This has led to more ETH being staked on the network, which could help to increase its security and stability. However, there are concerns that the increased use of staking services could lead to a concentration of power among large staking pools, which could be used to manipulate the network. 

There are also concerns that the rewards offered to stakers could create a perverse incentive for them to collude and engage in malicious behavior, such as double-spending. 

Despite these concerns, the popularity of staking services continues to grow, with more and more investors looking to take advantage of the potential rewards on offer. Whether this trend will continue in the long term remains to be seen, but ETH staking seems to be going from strength to strength.

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