- Considering the current scenario, staked ETH would continue to overtake ETH on exchanges.
- The staked ETH accounted for 20% of the total circulating supply.
Users showed increased interest in Ethereum [ETH] staking since Shapella upgraded to mainnet in April.
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Staking, which was originally seen as a risky proposition due to the ambiguity of withdrawal, received a boost after ETH unlocking was authorized. After a successful test of the withdrawal mechanism, users returned to take back their ETH.
Since Shapella, the supply of staked ETH has jumped 26%.
The positive sentiment was corroborated by data from blockchain analytics firm Nansen. The company took to Twitter to reveal that staked ETH supply exceeded liquid ETH supply on exchanges in June, with a prediction that this trend is likely to continue in the near future.
There has been a sharp increase in the number of ETH staked with deposits consistently outpacing withdrawals over the past three months. At press time, the total amount locked equals 20% of the total circulating supply of ETH, according to a Nansen dashboard.
On the other hand, there has been a 31% decline in ETH balances on exchanges since November 2022. As shown in the chart below, the decline has accelerated since the introduction of Shapella. At the time of writing, around 22.8 million ETH was available for trading on exchanges, or 19% of all tokens in circulation.
The trend indicated that more and more people were withdrawing ETH from the market and using it as an investment to earn returns. And even though staking rewards have been steadily declining over the past couple of years, the demand for staking has increased.
Most bettors were in losses
Another possible reason behind the persistence of staking could be that several stakers were underwater on their investments. According to data pulled from a Dune dashboard, around 60% of punters were in losses since locking their ETH to the network.
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The majority of this staking occurred at price levels of $1,600 and $3,500, during the peak of the 2021 bull run. However, at press time, the market price of ETH was $1,886.48, according to CoinMarketCap.
The underperforming market encouraged bettors, especially more experienced ones, to continue seeking rewards in staking, rather than withdrawing and selling their holdings at a loss in the market.