Ethereum staking declines ahead of Shapella upgrade

April 10, 2023 at 9:56 am

Markets

According to the on-chain monitoring tool Glassnode, the quantity of ETH being staked every month has lately decreased.

In recent weeks, ethereum staking deposits have seen a minor decrease. This may be attributed to rising regulatory pressure and the upcoming update to Shapella on April 12.

Deposit trends by staking providers have exhibited a clear shift over time with Kraken, Binance and Coinbase jousting for deposit allocations across the Beacon Chain's early days.

As the dust settled between the three giants, it was Lido who emerged victorious, continuing to… pic.twitter.com/yp50NWQ5XJ
— glassnode (@glassnode) April 9, 2023

Glassnode released a study on the condition of the ethereum staking environment on April 9. The statistics show a recent decrease in deposit activity, citing regulatory pressure and the Shanghai upgrading.

Currently, Lido is responsible for approximately a third of the entire amount of ETH that has been staked. This is equivalent to around $11 billion based on the 5.9 million ETH that is now held on the platform.

This year, financial officials in the United States have been exerting significant pressure on cryptocurrencies. Even though no formal law from Congress classifies ETH, the Securities and Exchange Commission (SEC) is sure that ether is a security. It has clamped down on stakes due to this belief.

On April 12, the ethereum network will finally get an update that has been in the works for quite some time. The progressive release of ETH staked on the Beacon Chain will be made possible via the Shapella upgrade, also known as Shanghai hard fork.

According to Glassnode, these two contributing reasons decreased Ethereum staking deposits.

The company also said that significant centralized exchanges like Coinbase, Binance, and Kraken had lost considerable market share to the liquid staking platform Lido.

Centralized exchanges like Coinbase, currently in a legal battle on staking, charge a fee of 25% from the staking rewards. The commissions that Coinbase takes for other assets like Cardano and Solana are considerably more significant.

Lido takes a 10% commission and allows users to earn extra returns on DeFi platforms by staking their Lido Staked ETH. Lido also charges its users a 10% fee (stETH). This helps explain the change over time as experienced gamblers migrated to platforms that offered higher potential profits.

Analysts anticipate that liquid staking platforms like Lido will significantly increase activity when ETH is freed from the Beacon Chain due to the Shapella update.