Ethereum Network Staking Inflow and Validators Since Shapella Upgrade

Since the Ethereum (ETH) network moved to the new consensus mechanism, the operations saw some shifts as well. The staking inflows and validators, what used to be miners earlier, took place in the new regime. Given that the crypto market is always moving, the changes are certain. ETH staking inflows and the number of validators have changed in the past months, as expected, after the Shapella upgrade. 

Ethereum Staking Inflow Tumbled Since Shapella Upgrade

Following the Ethereum Shapella upgrade in April this year, the ETH staking inflows saw a massive jump. However, it was unable to keep up the pace and gradually settled down below the level it was during the upgrade. 

According to the Dune Analytics data, the ETH inflows on April 13, one day after the upgrade rollout, were 96,256. This rose to 408,940 on June 1, 2023, making the numbers quadruple in less than two months. 

On September 22, the reported ETH inflows stood at 40,963. Though it’s not the lowest since the Shanghai upgrade, it’s more than half since then. 

The staking inflows stand for the metric that gauges the number of unique or new wallet addresses that have shifted crypto assets to the Beacon Chain’s official deposit address for staking. Given the numbers mentioned above, it is clearly visible that the unique addresses joining the staking have dropped significantly after attaining the highest level above 400K+. 

Rise in Number of Ethereum Validators 

Shapella upgrade was a crucial turn since its rollout, the validators or stakers on the network would be allowed to withdraw their staked ETH. It was expected that validators depositing since December 2021 would opt for withdrawing the assets with rewards. 

However, the number of validators has also seen an increase. Currently, there are 844,344 validators on the Ethereum network, up from around 500K in April this year. 

The validators over a cryptocurrency blockchain network are responsible for carrying out the transaction process by validating transactions’ sender, receiver, amount, etc. Following the shift from Proof-of-Work (PoW) to Proof-of-Stake (PoS) after the Merge upgrade, the miners were replaced by validators. The validators take care of the security and functionality of blockchain networks. 

Liquidity Staking Raises Centralization Concerns

Following the shift from PoW to PoS, the prominent smart contract blockchain network witnessed concerns around centralization. The majority of Ethereum over the Beacon Chain belongs to a handful of liquidity service providers. 

Lido Finance, the biggest ETH staker, for instance, holds 32.23% of the overall staking market share, according to Dune Analytics data. This makes the protocol have control of one-third of the total 27,019,010 staked ETH. 

The community members reportedly decided to opt for self-limiting the staking to 22%. Many prominent staking platforms including RocketPool, StakeWise, Stader Labs, and Diva Staking, etc. agreed to the proposal. However, the Lido Finance community voted with over 99% in favor of refraining from accepting the self-limiting rule. 

Nancy J. Allen
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