Staking hits a new all-time high

More and more investors are staking their ether, either via Coinbase, Binance and Co., or via decentralized alternatives such as the liquid staking providers Lido (LDO) or Rocket Pool (RPL).

Since the Ethereum merge, the number of Ethereum staking has increased to 12.14 percent of the total Ether supply – a new record.

An impressive 14.12 million ethers, which are currently worth around 19 billion US dollars, are already being staked. Shortly after the merger and the conversion of the consensus mechanism to Proof of Stake (PoS), ETH is now ahead of Avalanche (AVAX), BNB Chain (BNB), Cardano (ADA) and Solana (SOL) at the top of the largest PoS blockchains market capitalization.

Additionally, ETH’s staking ratio, which currently stands at just 12.14 percent, still has some growth potential compared to other proof-of-stake blockchains. For comparison: At Solana or Cardano, between 70 and 80 percent of all SOL and ADA tokens in circulation are currently being staked.

Nevertheless, the ETH staking ratio has grown significantly this year – since January alone from 7.38 percent to 12.14 percent at the time of writing.

Why the Ethereum staking ratio matters

For Proof of Stake cryptocurrencies, the staking ratio is superficially important in two ways. On the one hand, the higher the total value of all staked tokens, the better the security of a proof-of-stake blockchain, since it becomes more costly for bad actors to carry out a 51 percent attack, for example.

On the other hand, the staking ratio can have a positive impact on the price of PoS cryptocurrencies like Ethereum. That’s because staked ETH is currently locked in a smart contract that prevents it from being sold immediately. It is still unclear when exactly this blocking period will fall. But even then, it is certain that it will not be possible to sell all ETH staked immediately.

Each staked ether token thus immediately reduces the total supply of ETH that can be traded.

Because of this, a continuously growing Ethereum staking ratio will cause Ether price to increase when demand stays the same or increases.