- February 13, 2024
- Posted by: [email protected]
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The Ethereum network is currently witnessing a substantial uptick in the number of validators seeking to stake their Ethereum (ETH), signaling renewed interest in staking activities. According to the data from ValidatorQueue, the validator entry queue has reached a significant level of 7,045, representing over 225,000 Ether (equivalent to $562 million). This marks the highest level since October 2023, and it is anticipated that the backlog will be cleared in slightly over 48 hours.
The backlog is a consequence of Ethereum’s limitations on the number of new validators that can join the network per epoch, which lasts approximately 6.4 minutes. Validators, entities that stake a minimum of 32 Ether, participate in running Ethereum’s proof-of-stake consensus blockchain, earning a steady rate of return similar to interest income from fixed-income instruments.
The recent surge in Ethereum staking activity is considered an early indication of renewed vitality in the network. David Lawant, FalconX’s head of research, emphasized the significance of the spike in the activation queue. However, Lawant pointed out that the annualized percentage yield on staked Ether has shown minimal improvement, with the composite Ether staking rate remaining between 3.5% and 4% for the past four months.
Despite the notable increase in the number of validators, it falls short of the figures observed after Ethereum’s Shapella upgrade in April of the previous year. The Shapella upgrade allowed for the withdrawal of staked Ether for the first time, reducing the associated risks.
Celsius, a crypto lender, announced plans to unstake its entire Ether holdings in early January, causing the validator waitlist to experience a brief surge. However, Ether’s recent price performance has been relatively modest compared to Bitcoin and the broader cryptocurrency market.
The uncertainty surrounding the potential launch of U.S.-based spot exchange-traded funds (ETFs) later this year and the need for clarity on the Securities and Exchange Commission’s (SEC) categorization of Ethereum contribute to cautious trading activity in the market. Traders eagerly await confirmation on whether ETH ETFs will be permitted to stake coins, with recent amendments to S-1 forms hinting at the possibility of such developments.
In parallel, Ethereum’s NFT market has witnessed a surge in trading activity, reaching its highest weekly volume since February 2023. Over the past week, NFT sales on the Ethereum network surged by approximately 100%, totaling an impressive $158 million. This surge aligns with the growing popularity of the Pudgy Penguins collection, currently ranked third by market capitalization.
