Ethereum Staking Growth Continues One Year After the Merge

A year after transitioning from proof-of-work to proof-of-stake, staking has become an appealing option for Ethereum holders. This shift, known as the Merge, allowed more holders to engage with the network and earn rewards by staking their assets.

According to the Q2 2023 “State of Staking” report from Kraken, total staking rewards across all cryptocurrencies reached an annualized value of $5 billion in the quarter. The leading 35 proof-of-stake cryptocurrencies account for a combined market cap of $288 billion, with $68 billion staked in these assets.

Staking provides an opportunity to earn returns while keeping hold of assets, which is particularly attractive in a risk-averse market. Currently, the annual percentage rate (APR) for staking is reported to be 3.9%. With the introduction of MEV Boost, returns have fluctuated between 4.2% and 5.6% over the last six months.

In April 2023, the Shapella upgrade enabled Ethereum stakers to withdraw their assets for the first time since staking commenced in December 2020. This development alleviated uncertainty and heightened demand for staking. Following the upgrade, nearly 7.5 million ETH has been added to staking, increasing the percentage of the total ETH supply that is staked from 14.5% prior to Shapella to 22.4% currently.

The number of validators has also experienced significant growth post-Shapella, rising from about 430,000 just before the upgrade to over 840,000 today. However, this rapid increase has caused some strain on the network, leading to higher latency and longer consensus times.

Developers are actively seeking solutions to these challenges while maintaining decentralization, such as raising the maximum ETH cap per validator.

Future upgrades are expected to bring down gas fees, enhance speed, and introduce account abstraction to the Ethereum network, further boosting its attractiveness. Since the shift to proof-of-stake, network participation has steadily increased, with the number of unique Ethereum addresses growing from around 205 million before the Merge to 245 million now.

With enhanced accessibility, improved flexibility and user experience, the potential to earn rewards, and the chance to engage with blockchain technology in a more meaningful way, staking continues to empower Ethereum holders and is set to play a crucial role in the network’s future.