Ethereum staking deposits have declined slightly in recent weeks due to increased regulatory pressure and the Shapella update scheduled for April 12.
On April 9, on-chain analytics provider Glassnode reported on the current state of the Ethereum staking ecosystem.
The data revealed that deposit activities are currently low “due to regulatory pressure and the improvement from Shanghai.”
Financial regulators in the United States have been tough on cryptocurrencies this year. The Securities and Exchange Commission (SEC) insists that Ether (ETH) is a security and has cracked down on staking despite the fact that there is no official legislation from Congress classifying ETH as such.
The Ethereum network will undergo a long-awaited upgrade on April 12. The Shapella hard fork, also known as the Shanghai hard fork, will enable the gradual release of ETH staked on the Beacon Chain.
These two factors have caused the drop in Ethereum staking deposits, according to Glassnode.
The firm also noted that major centralized exchanges like Coinbase, Binance, and Kraken have lost a lot of market share to the liquid staking platform Lido.
“When the dust settled between the three giants, it was Lido that emerged victorious, and it continues to dominate deposit inflows to this day,” he noted.
Deposit trends by staking providers have shown a clear shift over time with Kraken, Binance, and Coinbase all competing for deposit allocations in the early days of Beacon Chain.
When the dust settled between the three giants, it was Lido who emerged victorious and continued… pic.twitter.com/yp50NWQ5XJ
– glass node (@glassnode) April 9, 2023
Lido currently accounts for almost a third of the total amount of ETH staked. This equates to around $11 billion of the 5.9 million ETH on the platform.
Centralized exchanges like Coinbase charge a hefty 25% fee of staking rewards, and Coinbase fees are even higher for other assets like Cardano (ADA) and Solana (SOL).
Lido charges a 10% commission and offers the ability to earn additional returns on DeFi platforms through its Lido Staked ETH (stETH) staking token. This explains the change over time as smart stakeholders shifted to more profitable platforms.
Analysts have predicted that liquid staking platforms like Lido will get a boost when ETH is released from the Beacon Chain after the Shapella upgrade.
Related: Analysts Discuss ETH Price Results From Ethereum’s Upcoming Shapella Update
According to Ethereum metrics follow-up Ultrasound.Money, there are currently 18.1 million ETH staked in total currently valued at around $33.7 billion and make up 15% of the total supply.
After the Shapella update, it will slowly be released for retirement over the next few weeks and months.
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