Validators – people who help run the Ethereum network – “stake” ETH for a chance to write and authenticate transactions to the blockchain’s ledger. The staked funds get locked up with the network and accrue interest, but they will be impossible to withdraw until the network’s Shanghai upgrade, which is not expected until March.
While the growing number of staked ETH can be interpreted as a promising sign for Ethereum security and adoption, it may ramp up pressure on the network’s core developers to expedite work to enable withdrawals.
A larger amount of staked ETH should theoretically make it more difficult for an individual actor to sabotage the Ethereum chain. However, the bulk of Ethereum’s stake currently belongs to a handful of large actors – fueling concern that control over the chain is becoming too centralized.
Out of the 16 million ETH staked, roughly 4.65 million have been staked through Lido – a kind of community-driven validator collective. Lido, Coinbase, Kraken and Binance, the four largest Ethereum validators, command a 55.88% share of all staked ETH, according to Nansen.
The amount of staked ETH has climbed about 16.68% since the Merge in September, when Ethereum abandoned its old proof-of-work consensus mechanism. The Merge fully transitioned the Ethereum blockchain to a proof-of-stake (PoS) consensus mechanism, which abandoned proof-of-work’s energy-intensive crypto mining process in favor of today’s staking system.
CoinDesk is an award-winning media outlet that covers the cryptocurrency industry. Its journalists abide by a strict set of editorial policies. In November 2023, CoinDesk was acquired by the Bullish group, owner of Bullish, a regulated, digital assets exchange. The Bullish group is majority-owned by Block.one; both companies have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary with an editorial committee to protect journalistic independence. CoinDesk offers all employees above a certain salary threshold, including journalists, stock options in the Bullish group as part of their compensation.