YEREVAN (CoinChapter.com) — Ethereum (ETH) has reached a significant milestone, with 25% of its total token supply now staked. That further pushes the blockchain’s agenda of becoming a deflationary token, with fewer native tokens in circulation, which may increase prices if the demand rises.
The Significance of Ethereum Staking Milestone
Staking represents a key mechanism in proof-of-stake (PoS) blockchains, where validators lock up a portion of their tokens as a security deposit to participate in the network’s consensus mechanism. This process secures the network and rewards participants, making it an attractive investment opportunity.
Ethereum’s new milestone of over 30 million ETH staked, valued at approximately $73 billion, underscores the community’s robust confidence in its long-term vision and stability.
For the uninitiated, the Ethereum network transitioned to a proof-of-stake consensus mechanism in September 2022.
A Secure Ethereum?
Ethereum boasts nearly one million validators, highlighting the decentralized nature of Ethereum’s security mechanism.
These validators are crucial in maintaining the network’s integrity, processing transactions, and creating new blocks. The significant number of validators ensures a wide distribution of network governance, minimizing the risk of centralized control and enhancing security against potential attacks.
Currently, investors must hold a minimum of 32 Ether (approximately $77,700) to participate as validators on the network. However, the accessibility hurdle is mitigated by liquid staking platforms like Lido, enabling users to stake their assets collectively in a shared pool.
Impact on ETH Price?
The recent surge in Ethereum staking activity has positively influenced the altcoins market value. There is also a notable increase in ETH price following the announcement.
This uptick reflects the market’s response to Ethereum’s growing ecosystem and its potential for widespread adoption.
While writing, ETH price hovers at $2,427, just 50% below its all-time high of $4,878 from Nov. 10, 2021.
The Shapella upgrade in April 2023 enabled staked Ether withdrawals. Despite this upgrade, staking has seen a steady rise on the network.
Moreover, the introduction of restacking allows users to stake the same ETH across multiple protocols. This further bolsters Ethereum’s appeal by enhancing both security and investment opportunities.
With Ethereum’s supply becoming increasingly deflationary due to the burning mechanism introduced in the merger, the ecosystem is on a path toward reducing annual inflation.
This deflationary trend, coupled with robust staking participation, bodes well for Ethereum’s economic model and its appeal as an investment.
