Ethereum: 2.48 million ETH Awaiting Staking

Ethereum staking is experiencing a significant resurgence of interest, with thirteen times more ETH waiting to enter than to exit. This imbalance potentially reduces the available supply, without guaranteeing an increase in price on its own.

In Brief

• Ethereum staking is seeing a clear resurgence of interest, with far more ETH waiting to enter than to exit.
• The activation queue far exceeds that of withdrawals, creating an imbalance of over thirteen to one.
• More than 43 million ETH are now staked, accounting for over one-third of the total supply.
• This increase in staking may reduce the available liquid supply, without permanently removing ETH from circulation.
• The annual yield remains around 2.58%, despite the increase in the number of validators.

An Imbalance of Over Thirteen to One

The main signal currently observed is the validator queue. Nearly 2.48 million ETH are awaiting staking with a wait time of between 43 and 45 days, while Vitalik Buterin desires a one-click process.

However, various data points are progressing rapidly. On September 21, the Validator Queue dashboard recorded 1.75 million ETH in the entry queue, compared to only 131,040 ETH in the exit queue. Thus, deposit requests remained 13.4 times higher than scheduled withdrawals.

Some indicators help measure the significance of this imbalance:

• 1,753,909 ETH were waiting for activation;
• 131,040 ETH were in the exit queue;
• The net gap reached 1,622,869 ETH in favor of entries;
• The activation delay exceeded 30 days, compared to about two days for exits;
• 43.2 million ETH were staked, accounting for 35.39% of the supply.

Such a queue is not the result of a malfunction. Deliberately, Ethereum limits the number of validators who can enter or leave the network during each epoch. This mechanism, known as the "churn limit," prevents too rapid a fluctuation in the number of participants in the consensus.

The observed cap was around 256 ETH per epoch. Since an epoch can last nearly 6.4 minutes, about 57,600 ETH should theoretically be processed daily. Such a pace explains why a request for 1.75 million ETH results in over a month of waiting.

More Than a Third of ETH Now Secures the Network

As of September 21, the Ethereum network had 906,000 active validators. To secure the network, validate blocks, and receive an estimated annual yield of 2.58%, they collectively locked up 43.2 million ETH.

This share constitutes more than one-third of the total Ether supply. If more holders position their tokens in staking, these ETH can no longer be automatically sold on the spot market. A sustainable increase in deposits may therefore reduce the available liquid supply on exchanges.

However, this effect must be nuanced. Staked ETH do not permanently disappear from circulation. Indeed, validators can request their exit, although they must adhere to the timelines imposed by the protocol. Liquid staking services also provide representative tokens that can be traded or used in decentralized finance.

Part of this demand is attributed to large operators, including BitMine, as well as the accumulation of many whales. However, exclusive statistics from the queues do not allow for the identification of depositors. It does not distinguish between companies, centralized exchanges, liquid staking protocols, and individual holders.

The increase in the number of participants also reduces the yield distributed to each. Thus, the rate of 2.58% remains lower than the levels observed when fewer ETH secured the network. This growth in the entry queue indicates that some investors accept a lower yield to maintain long-term exposure to the asset.

A Favorable Signal That Does Not Guarantee Ethereum's Rise

ETH is currently trading around $2,660. Its price has gained 3.8% over the week, after rising from less than $2,400 on September 17 to over $2,600 two days later.

Such a recovery coincides with strong staking demand, but it does not establish a causal link. The price also depends on flows into ETFs, network activity, macroeconomic conditions, and the overall trend in the crypto market.

Nevertheless, the current imbalance remains constructive. It reveals that much more ETH is destined to secure the network than to return quickly to the market. The difference of 1.62 million ETH between the two queues represents about a month of entry capacity at the current pace.

Three indicators will help verify the strength of the signal: the maintenance of a long activation queue, the absence of a sudden increase in exits, and ETH's ability to maintain its recent rebound. An inversion of these trends would weaken the hypothesis of a sustainable contraction in the liquid supply.