Key Points
- The daily amount of new Ethereum staked has reached a year-to-date low.
- This decline is largely due to Ethereum’s weak price performance.
The amount of new Ethereum (ETH) staked each day has experienced a significant drop, hitting a year-to-date (YTD) low on May 6th.
Data from on-chain analytics provider Glassnode reveals that on this day, the number of coins transferred to the staking deposit contract address was 11,285 ETH, equivalent to around $34 million.
Decline in Ethereum Staking
This represents a 92% decrease from the YTD peak of 192,008 ETH staked on March 28th. When assessed using a 30-day moving average, the amount of new ETH staked began its downward trajectory on February 29th, with the figure now down by more than 85%.
The decline in daily ETH staking can be linked to the altcoin’s price movements. At the time of writing, ETH was valued at $3,033, a 14% decrease in value over the past 30 days according to CoinMarketCap.
Impact on Staking Rewards
When ETH holders stake their coins, they are typically rewarded with ETH upon the staking period’s end. Therefore, if ETH’s value drops, the dollar value of these rewards also decreases.
For instance, on the leading liquid staking platform Lido Finance, its staking Annual Percentage Rate (APR) has been on a downward trend since April 19th. With a current rate of 2.9%, this represents a 19% drop since the aforementioned date.
This decrease potentially makes staking less appealing to new investors seeking returns. Furthermore, short-term holders, who often influence day-to-day price movements, may be deterred from staking if ETH’s price continues to fall, opting to sell their coins instead.
Despite Ethereum’s current performance, voluntary exits by its network validators have been decreasing. Data from Glassnode indicates that after peaking at 2000 on April 2nd, the daily count of validators leaving the network has fallen by 61%.
As a result, the number of active validators on the Ethereum network continues to rise. At the time of writing, there were 994,000 active validators on the network.
