The supply of staked Ether reached an all-time high this week, signaling growing investor confidence and a squeeze on the liquid supply of the world’s second-largest cryptocurrency.
Over 35 million Ether (ETH) coins are now staked under the Ethereum blockchain’s proof-of-stake consensus model, according to data from Dune Analytics.
Over 28.3% of the total Ether supply is now locked into smart contracts and is unsellable for a pre-determined time in exchange for generating passive income for investors.
A growing staked supply also indicates that a large percentage of investors are preparing to hold their ETH instead of selling at current prices.
Over 500,000 ETH has been staked in the first half of June, signaling “rising confidence and a continued drop in liquid supply,” said pseudonymous CryptoQuant author Onchainschool in a Tuesday post.
Ether accumulation addresses, or holders with no history of selling, have also reached an all-time high of 22.8 million in ETH holdings, signaling that Ethereum is among the “strongest crypto assets in terms of long-term fundamentals and investor conviction,” the analyst said.
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The recent rise in staking comes amid a more favorable US regulatory outlook. The record comes nearly three weeks after the US Securities and Exchange Commission (SEC) released new guidance on cryptocurrency staking, widely seen as a victory for crypto regulations, Cointelegraph reported on May 30.
“Protocol Staking Activities,” such as cryptocurrencies staked in a proof-of-stake blockchain, “don’t need to register with the Commission transactions under the Securities Act,” SEC’s Division of Corporation Finance said in a May 29 statement.
However, industry participants are still waiting for the approval of the first Ether staking ETFs after the SEC delayed its decision on Bitwise’s application to add staking to its Ether ETF on May 21.
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Lido accounts for 25% of the staked Ether supply
Over 25% of the 35 million staked Ether tokens have been deployed through the liquid staking protocol Lido. Binance holds 7.5% of the staked Ether supply, and Coinbase holds 7.4%, according to Dune data.
Coinbase exchange has become Ethereum’s largest node operator, holding over 11.4% of staked Ether supply through its validators, Cointelegraph reported on March 20.
Decentralization purists have previously criticized the growing Ether supply staked through liquid staking protocols as a potential centralization risk, which may create a single point of vulnerability for the network.
Despite the criticism, institutional adoption saw a significant uptick thanks to the development of liquid staking infrastructure, as a “significant percentage of Lido’s TVL already comes from institutions” amid growing demand, Konstantin Lomashuk, founding contributor at Lido protocol, told Cointelegraph.
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