There are currently just over 72% of Ethereum (ETH) tokens available after staking grew rapidly over the past months. In particular, liquidity staking is the biggest factor affecting the number of tokens locked in 2024.
Staking on Ethereum is growing strongly, with 32 ETH deposited into the main smart contract. Based on the number of tokens deposited and withdrawn, approximately 27.5% of the total ETH supply has been staked, leaving only 72.5%. Of these, a portion may also be illiquid, held in long-term wallets, in vaults or other protocols.
Estimated percentage of ETH participating in staking | Source: 21co
More than 91% of staked ETH is in locked deposits, as of June 17. The largest deposits were made between the $1,600 and $1,900 price ranges.
46.3 million ETH are in locked deposits
The Ethereum network recorded net deposits in June, and total deposits have been dominant. Top ETH staking entities include large centralized exchanges such as Coinbase, Binance and Kraken, or from liquidity staking protocols such as Lido DAO.
Beacon Deposit Contract reports a total of 46.3 million ETH has been deposited. The percentage of locked supply is currently higher than the Ethereum Foundation’s allocation, estimated at 2.9 million tokens. ETH supply has been unevenly distributed, with around 40% of the initial 60 million tokens earmarked for the ICO sale. Since Ethereum’s launch, about 49% of the total supply has been generated by miners and only a relatively small portion has been generated by proof-of-stake validators.
ETH locked in DeFi protocols has doubled by 2024
Additionally, ETH locked in DeFi protocols has doubled since the beginning of 2024, reaching a value of around $62 billion. An estimated 17 million ETH are part of DeFi protocols, either as wrapped ETH or another form of collateral. This further cuts the available token supply.
Every day, 2,622 new ETH are created through the proof-of-stake mechanism. This reward is distributed to over 1 million validators. Additionally, some of the ETH used to pay fees will be burned, causing slight deflation of the Ethereum blockchain. More than 4.4 million ETH were burned, keeping the supply stable at around 120 million tokens.
Another 15 million ETH are held by the top three exchanges, Binance, Huobi Global, and OKEx. Whales also hold ETH for long periods of time, with the largest known ETH holder being Vitalik Buterin, with around 245,000 ETH.
Even with a relatively large supply, the amount of ETH available is limited and may only be enough for a few large projects. Another amount of ETH may be locked in the coffers of established startups. This could bring the amount of ETH available below 50% of the total supply.
In the DeFi space, ETH tokens can actually be “multiplied”. The presence of liquid staking tokens (Liquid Staking Tokens – LST) creates more layers of liquidity, based on a single ETH token locked as collateral.
ETH is going through a supply crisis
The scarcity of ETH supply comes at a time when physical tokens may be needed to power ETF products, which are likely to be launched later this summer. This news caused ETH withdrawals from Coinbase to skyrocket, with one transaction worth more than 336,000 ETH.
Additionally, staking activity has accelerated since May 21, with 500,000 ETH locked in just a few weeks. One of the reasons for the scarcity of supply is the variety of projects aiming to attract ETH from small or larger users. Lido DAO remains the leading staking project, responsible for approximately 27% of ETH locked in smart contracts.
Other protocols are also offering the opportunity to stake ETH in exchange for other valuable tokens and cumulative rewards. The growth of staking activity has also generated 10,000 new validators in less than a month.
Staking is also competitive because the Ethereum network cannot scale with an infinite number of validators and will start to reach the technological limits of consensus.
Recently, MetaMask also started its own staking pool, with this feature available to investors outside the US and UK. Other staking protocols like Rocket Pool hope to increase the ease of participating in staking by only requiring users to deposit ETH to the protocol.
Viet Cuong
According to CryptoPolitan
