Ethereum Staking Surges: 28% of ETH Now Staked, Exchange Holdings Fall to Record Low

• Ethereum has over 28% of its total supply staked, highlighting increased confidence in the network.
• Only 10% of Ethereum is held on exchanges now, down from higher levels observed in the past. 

Ethereum has achieved a noteworthy milestone with over 28% of its total supply now staked, according to crypto researcher Leon Waidmann. This unprecedented level of ETH staking highlights the growing confidence in Ethereum’s future and the community’s commitment to network security.

https://Twiter.com/LeonWaidmann/status/1817893259013710246

Current data indicate that Ethereum is held on exchanges at about 10% compared to earlier levels. This is a clear sign of a shift towards staking and HODling, which, in essence, reduces the supply of tokens in circulation. 

Staked ETH and Validator Numbers Surge

The Ethereum reserve on exchanges has declined from approximately 20 million ETH to 17 million ETH within a year. This decline is correlated with the dynamics of prices and their sudden rise starting from the beginning of 2024. With ETH moving out of exchanges to private wallets or for staking, the price has generally gone up, indicating that investors are holding onto their coins for longer periods. 

Data from CryptoQuant suggests that there has been a gradual rise in the number of ETH tokens staked in contracts in the last year. Currently, more than 33.9 million ETH tokens are staked with a total value of over $111 billion. 

Beaconcha. in data also reveals that the number of validators has crossed one million, and more than 33. 6 million ETH are staked. The average number of ETH locked per node of each validator is 32. 06 ETH, which shows that more and more people are involved in validating and securing Ethereum transactions. 

The increase in staked Ethereum and decrease in the supply on exchanges may hint at a supply squeeze. This development might affect the value of Ethereum in the market. With more ETH being staked and therefore less ETH available in circulation, buying pressure may rise and lead to higher prices.

Holders Demonstrate Increased Confidence

Another interesting pattern is the decline in the amount of ETH stored on major exchanges. According to CryptoQuant, by July 30, exchanges held only 16.6 million ETH, which is a huge difference compared to 32. 5 million ETH held in July last year. This decline indicates that ETH holders are gradually moving their coins out of exchanges. 

The trend of pulling ETH from exchanges often indicates heightened confidence among holders. This transfer of tokens from exchanges such as Binance or Coinbase is often interpreted as holding assets or participating in DeFi applications. This transition might involve engaging in DeFi protocols or staking to earn annual returns.

The current decline in the availability of ETH, alongside the rising demand for spot Ethereum ETFs in the United States, shall boost the demand for the cryptocurrency.  In addition, newly activated Ethereum whales are also participating in the staking processes. In May, a dormant whale activated 4,032 ETHs, worth $7.4 million, after being inactive for more than two years. 

This whale had purchased 60,000 ETH on the first-ever block known as the Genesis block in 2015. Such actions, possibly linked to Ethereum’s “Shanghai” upgrade, which improved scalability and performance, underscore growing confidence in Ethereum’s future.