Ethereum has crossed a symbolic threshold, with more than half the total ether (ETH) issued now held in its proof-of-stake (PoS) contract for the first time in the network’s 11-year history, Santiment said in a post on X that has been met with criticism.

The onchain analytics firm on Tuesday said that 50.18% of all ETH issued historically is now sitting in the staking deposit contract. The figure reflects cumulative ETH that has flowed into the contract since staking was introduced ahead of the network’s 2022 transition from proof-of-work to PoS.

According to CoinDesk data, the total supply of ether is 120.69 million tokens. Bitmine, the world’s largest ether-focused treasury firm, has 4.29 million ETH, of which 2.9 million is staked. According to Arkham data, the largest holder is the Eth2 Beacon Deposit Contract with 77.1 million or over 60% of the total supply. It holds the most because it serves as the central, mandatory gateway for staking to secure the blockchain. Beacon is followed by Binance with 4.1 million ETH, BlackRock with 3.4 million and Coinbase with 2.9 million.

While the tokens are staked, they cannot be transferred or traded. Withdrawals have been enabled since the Shanghai upgrade in 2023, allowing validators to exit and return ETH to circulation.

That distinction prompted some analysts to caution against interpreting the 50% figure as a permanent supply lock.

‘Inaccurate and materially misleading’

“The post is inaccurate, or at least materially misleading,” Luke Nolan, senior research associate at CoinShares, told CoinDesk. “It references the one-way deposit contract used for ETH staking, but does not account for withdrawals. While ETH is sent into that contract when validators stake, it is not a permanent sink.”

Since withdrawals were enabled, ETH can exit the validator set and re-enter circulation, meaning that looking at the deposit contract balance alone can overstate the amount effectively staked, Nolan said.

“There is also an important nuance around the numbers being cited,” he added. “It is not correct to suggest that over 80 million ETH are currently staked. Roughly 80 million ETH have passed through the staking contract historically, but the amount actively staked today is closer to 37 million ETH, which is around 30% of the current circulating supply. That distinction materially changes the narrative.”

Aleksandr Vat, BizDev at Ethplorer.io, agreed with Nolan and provided CoinDesk with supporting data reinforcing that distinction.

The Beacon deposit contract balance on the Etherscan tracker, currently around 80.97 million ETH, reflects cumulative deposits since launch and does not decrease when validators exit. Withdrawals are processed by minting ETH back to execution-layer addresses rather than subtracting from the deposit contract itself, Vat said.

According to active staking metrics, approximately 37,253,430 ETH are presently staked, based on data from Ethplorer and CryptoQuant, implying that staking represents 30.8% of the total supply.

Santiment’s 50% figure appears to compare the cumulative Beacon contract balance to historically issued supply prior to EIP-1559 burns, Vat said. While that may be mathematically consistent depending on the denominator used, it does not represent the amount of ETH currently locked or removed from circulation, he noted.

Ethereum matures into ‘digital bond’

Even so, the milestone highlights how central staking has become to Ethereum’s economic design, Vineet Budki, partner and CEO at Sigma Capital, told CoinDesk. As participation rises, a larger share of ETH earns yield through validator rewards, reinforcing its positioning as a yield-bearing crypto asset, he said, adding he sees the development as evidence of Ethereum’s maturation into what he called a “digital bond.”

“Ethereum’s milestone of 50% staked supply marks its evolution into a digital bond, where the network’s security is fueled by long-term conviction rather than short-term speculation,” Budki said. “By locking half the total issuance in a one-way vault, the protocol has engineered a structural supply crunch.”

Budki also pointed to accelerating network activity, including a 125% year-over-year increase in daily transactions, a doubling of daily active addresses and an increase in tokenized real-world assets, much of it occurring on layer-2 networks that settle back to Ethereum’s base layer.

Nolan noted, however, that recent validator growth has been concentrated among large participants.

“A significant portion of recent validator entries has been driven by large entities such as Bitmine and U.S.-listed ETFs, which have taken up a notable share of the entry queue,” he noted.

With staking levels continuing to climb, the debate shows just how Ethereum’s supply metrics, and how they are presented, can significantly shape market narratives, Budki concluded.