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  • Staked supply was 23.6% of ETH’s total circulating supply.
  • ETH’s exchange balance was barely 12% of the total coins in circulation.

Users have shown significant interest in Ethereum [ETH] staking since the Shapella Upgrade went live earlier this year.

As of this writing, 28.6 million yield-generating coins were locked up on the network, accounting for 23.6% of ETH’s total circulating supply, as per a Nansen dashboard.

Source: Nansen

Staked supply sees a sharp increase

Users moved towards the yield-bearing mechanism after gaining more control over their staked ETH, including the ability to unstake them at any time.

The increased share of staked ETH in comparison to total ETH trading volume demonstrated the extent of investors’ confidence.

Data shared by IntoTheBlock CEO Jesus Rodriguez revealed that the deposited amount was 1.4% of the trading volume as of 21 November.

Source: IntoTheBlock

While 1.4% may appear to be a very small portion, a better way to look at it is to compare staked supply to exchange supply.

According to AMBCrypto’s analysis of Glassnode’s data, a fascinating divergence was observed between the two in 2023.

The supply locked away in Ethereum’s deposit contract charged to new highs. In contrast, the ETH available for active trading sank to new depths.

As of this writing, ETH’s exchange balance was barely 12% of the total coins in circulation, the lowest in more than seven years.

Source: Glassnode

ETH rewards continue to drop

These findings underlined that people were taking ETH out of the market and using it as an investment to earn yield. The surprising part was that all of this happened despite the fact that staking awards have reduced over time.

According to Beaconcha.in, the annualized financial return per validator was just 3.68%. down from 8.61% seen in May.

Source: Beaconcha.in

Read ETH’s Price Prediction 2023-24

The rewards were inversely related to the amount of ETH deposited and the number of stakers involved. Put simply, the more the number of stakers, the more thinly the yield gets spread out.

At press time, ETH regained the $2,000 level after slipping below to $1,949 during U.S. trading hours. The broader market reacted to the recent shock of Binance CEO stepping down.

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