Ethereum has become the third-most staked token after climbing to a new all-time high of $1,575 on Feb. 3. As of press time, the staking contract held more than 2.9 million ETH.
Ethereum’s rally to over $1,500 allowed it to pass the Avalanche network in terms of stake capitalization. Interestingly, the boost is an effect from just 2.15% of Ethereum’s supply that is being locked up in ETH 2.0.
The token still falls short of Cardano and Polkadot, which have $9.3 billion and $11.2 billion staked respectively. However, their staking percentages in relation to total supplies are much higher.
Ethereum began its transition from version 1.0 to ETH 2.0 at the end of 2020. Moving away from a Proof-of-Work (PoW) validation method to a Proof-of-Stake (PoS) protocol.
Ethereum(ETH ) Utilizing Proof Of Stake Protocol
Utilizing PoS, Ethereum will be able to theoretically complete faster transactions across the network at a lower price. With staking, users validate transactions by using staked deposits as collateral. Rewarding users for acting truthfully and punishing any nodes which try to deceive the network by slashing their initial stake.
This model is an upgrade in terms of verification, as it provides additional security to the network. Making earnings from confirmation more inclusive. Since the launch of the ETH 2.0 staking contract, users from around the world have deposited almost 3 million ETH.
Since Ethereum’s Beacon Chain launched in early December, the staking contract has continued to grow. In January alone, nearly one million additional Ether tokens were sent to the staking contract. The total number of ETH 2.0 validators has also surged by 55%, rising from 49,200 to 76,200 in just a few weeks.
One reason why the Ethereum network has exploded in popularity over the last year is decentralized finance (DeFi). DeFi allows everyday users to complete financial transactions without the need of a third party. Enabling them to extract the full value of their transaction without being taken advantage of by the platform operator.
The total value locked in DeFi rose from less than $1 billion at the beginning of 2019 to almost $30 billion currently. With the majority of DeFi applications built on Etheruem, it’s no surprise that ETH was able to become the third-largest staked token.
The Ethereum network is the largest by far, and assuming DeFi continues to establish itself as a pillar of blockchain, more users will likely be open to staking their Ethereum.
