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Ether Staking Deposits Top Withdrawals for First Time Since Shapella Upgrade
The divergence comes amid a meme coin frenzy that has pushed up fees on the Ethereum blockchain.
Updated May 9, 2023, 3:51 p.m. Published May 9, 2023, 10:21 a.m.
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Ether holders are rushing to stake their tokens with network validators, pushing deposit activity to the highest level since the Shapella upgrade earlier this year.
More than 200,000 ether have been deposited to the network since the start of the week, data from the on-chain analytics tool Nansen show, marking the first time deposits have outpaced withdrawals since Shapella went live last month. The additions bring the number of ether locked for staking purposes to over 19 million tokens – about 15% of the total circulating supply.
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The influx comes as traders flock to meme coins such as pepecoin (PEPE), which has strained the Ethereum network and sent transaction fees to a 12-month high.
Over 6 million staked ethers are held on Lido Finance, a protocol that issues depositors with alternative tokens representing the amount they've locked up. Those alternatives can then be used as liquidity in the broader decentralized finance (DeFi) ecosystem.
Shappella – a portmanteau of Shanghai and Capella, two major Ethereum network upgrades that occurred simultaneously on April 12 – gave investors the ability to withdraw their staked ether at will for the first time.
In a proof-of-stake blockchain such as Ethereum, users stake, or lock, cryptocurrency – ether in this case – to help secure and confirm new data blocks. These stakers receive network rewards in the form of tokens, creating a form of passive investing strategy.
Platforms such as Lido pay out 6.6% in annualized yield rewards to stakers. More complex strategies involving staked ether and other tokens can yield up to 21%, data from Defillama shows.
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