Ethereum Staking Vault Now Holds Half of Total ETH Supply: Santiment

TLDR

• Ethereum’s staking contract now holds over 50% of the total ETH supply for the first time in its history.
• Approximately 37 million ETH are currently staked, representing 30% of the total 121.4 million ETH supply.
• The staking address operates as a one-way vault, temporarily locking ETH to help secure the network.
• The staking vault accumulates ETH over time, making its share of the supply appear larger.
• The validator entry queue has reached record highs with 3.9 million ETH waiting to be staked.

Ethereum’s staking contract now holds over 50% of the total Ether supply for the first time. This marks a notable shift, according to on-chain analytics provider Santiment. However, some confusion surrounds how the staking address functions, with key factors influencing the apparent increase in Ether locked in the contract.

Ethereum Staking Contract Holds 50% of ETH Supply

Santiment reported that Ethereum’s proof-of-stake contract address has surpassed 50% of the total Ether supply. The Ethereum network’s staking contract currently holds over 37 million ETH, representing 30% of the total 121.4 million Ether tokens. Despite this, the actual percentage of staked Ether fluctuates based on the way coins are counted, whether before or after being burned.

The staking contract acts as a one-way vault, locking Ether temporarily to secure the network. Once staked, Ether cannot be spent or traded until the validator withdraws it. Santiment explained that when validators leave, the staked ETH is released as newly issued coins rather than being pulled directly from the vault itself.

When Ether is staked, it enters a contract, which removes it from circulation. The contract then holds it, preventing any trading or spending during that period. Santiment clarified that this system leads to an accumulation of Ether in the staking vault, making it seem as if the staking contract holds a larger portion of the total supply.

This increase in the contract’s share is due to how the system handles the release of coins. As more Ether is issued and burned over time, the percentage of staked Ether continues to rise. Santiment also noted that this trend would likely continue, especially in bear markets or during times of low trading activity.

Staking Demand Soars Amid Bear Market

Santiment observed a surge in demand for Ethereum staking, with the validator entry queue nearing record highs. Approximately 3.9 million ETH are waiting to be staked, with a wait time of 67 days. This growth comes despite Ethereum’s price recently falling below $2,000, driven by panic selling among retail traders.

Analysts, including Merlijn The Trader, pointed out that Ethereum may be seen as “boring” in the current market.

Despite the low price, this period could be crucial for building positions as staking demand increases. Ethereum’s staking contract is expected to continue growing, especially as more coins are locked during periods of market stagnation.

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