Ethereum Staking Deposits Plummet Amid Regulatory Crackdown and Shapella Upgrade

Key Points:

• Ethereum staking deposits decline due to increased regulatory pressure and the Shanghai upgrade.
• Major centralized exchanges lose market share to liquid staking platform Lido. It currently accounts for almost a third of the total amount of ETH staked, equating to around $11 billion from the 5.9 million ETH on the platform.
• Analysts predict a boost for liquid staking platforms such as Lido when ETH is released from the Beacon Chain after the Shapella upgrade.

According to on-chain analytics provider Glassnode, there has been a slight decline in Ethereum staking deposits in recent weeks.

This could be attributed to two main factors: increased regulatory pressure and the upcoming Shapella upgrade, also known as the Shanghai hard fork, which is scheduled to take place on April 12.

As reported by Glassnode on April 9, deposit activities are currently low due to the aforementioned factors. Financial regulators in the United States have been cracking down on cryptocurrency this year, with the Securities and Exchange Commission being particularly adamant that Ether is a security. Despite there being no official legislation from Congress classifying ETH as such, the SEC has still taken action against staking.

In addition to regulatory pressure, the upcoming Shapella upgrade has also contributed to the dip in Ethereum staking deposits. The upgrade will enable the phased release of ETH staked on the Beacon Chain, which has caused some uncertainty among stakers.

Glassnode also noted that major centralized exchanges such as Coinbase, Binance and Kraken have lost a lot of market share to the liquid staking platform Lido. As of present, Lido dominates deposit inflows and currently accounts for almost a third of the total amount of ETH staked, equating to around $11 billion from the 5.9 million ETH on the platform.

This shift in market share can be attributed to Lido’s lower commission rates and the potential for additional yields on DeFi platforms through its staking token, Lido Staked ETH (stETH). Whereas centralized exchanges such as Coinbase take a hefty 25% commission from staking rewards, Lido only takes a 10% commission.

Analysts predict that liquid staking platforms like Lido will benefit greatly from the release of ETH from the Beacon Chain after the Shapella upgrade. According to Ethereum metrics tracking platform Ultrasound.Money, there are currently 18.1 million Ethereum staked in total, valued at around $33.7 billion and representing 15% of the entire supply. This amount will be slowly released for withdrawal in the weeks and months following the upgrade, allowing stakers to potentially earn even more rewards in the future.

DISCLAIMER: The Information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.

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