Declining Momentum: The Unraveling Story of Ethereum Staking

The number of Ethereum (ETH) holders choosing to stake their coins is declining, according to data from CryptoQuant. As of August 23, the staking inflow total stood at 30,656, down from 404,704 registered on June 1.

The staking inflow total measures the number of unique addresses moving coins to the official Beacon Chain deposit address for staking purposes. This number had been steadily increasing from around 5,952 on April 3 to 404,704 on June 1. The spike in staking inflow was largely driven by the activation of the Shapella upgrade on April 12, which saw the count rise from 16,736 to 404,704 in less than two months.

The Shapella upgrade allowed Ethereum validators to withdraw their coins for the first time since late December 2021 when they began locking them. Validators, who are responsible for validating transactions and maintaining network security, were given the option to continue staking their coins or exit the system.

Despite the decline in staking count, the number of Ethereum validators has actually increased. According to Dune Analytics, the number of validators rose from around 568,000 on April 12 to over 913,000 as of early September 2023.

Since September 2022, Ethereum has transitioned from a proof-of-work consensus protocol to a proof-of-stake consensus. This means that instead of relying on miners, Ethereum now depends on validators. Currently, there are over 813,105 active validators who have locked over 26 million ETH.

The drop in staking count is a cause for concern, but it does not necessarily indicate a vulnerability or flaw in the Ethereum network. The decrease in staking count does not reveal the number of ETH holders who chose to withdraw their coins during this period.

However, if there is a significant increase in the number of unlocked ETH or validators deactivating their nodes, it could raise concerns about centralization. Liquidity-staking providers like Lido Finance have gained popularity following the Shapella upgrade, and if more ETH holders choose to stake their coins through these providers, it could potentially centralize the network.

Lido Finance, a dominant decentralized finance (DeFi) protocol with a total value locked (TVL) of over $13.9 billion as of September 22, channels ETH from holders, allowing them to earn staking rewards.

Overall, while the decrease in staking count is noteworthy, it is important to consider additional factors before concluding that Ethereum is becoming centralized. The network continues to rely on a large number of active validators, and the decision of individual ETH holders to stake or withdraw their coins can be influenced by various factors.

– CryptoQuant: [Link](
– Dune Analytics: [Link](
– [Link](
– TradingView: [Link](
– DeFiLlama: [Link](

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J-S Tremblay
About the author - J-S Tremblay

I've been involved in the cryptocurrency world since 2016 and trading since 2019. I started Moon and Lambo in 2021. I'm passionate about crypto and love to share my knowledge. I hate bankers and I hope that cryptocurrency will change the financial world for the better. View full profile...

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