In brief
- The queue to become an Ethereum (ETH) validator, which allows you to stake the cryptocurrency, has reached the highest level since September 2023.
- Analysts think this may be partly due to the surge of investment in ETH treasury firms, which often engage in staking.
- Lower network fees on the blockchain were also highlighted as a potential cause.
Amid strong ETF inflows in recent weeks and growing institutional interest in ETH treasuries, Ethereum’s validator entry queue hit its highest level in two years on Tuesday.
There are currently 860,000 ETH, worth around $3.7 billion at today’s values, waiting in line, according to validator Everstake. Processing existing queues will likely take around 14 days, as no more than 1,800 validators can exit daily and only 900 can enter, Illia Otychenko, lead analyst at CEX.IO, told Decrypt.
Everstake called the results “pretty striking,” as it hasn’t seen queues of this size since September 2023 after the Shanghai upgrade earlier that year enabled ETH stakers to withdraw their capital for the first time.
The wait for users who want to become validators, which enables them to stake their tokens and gain rewards, has lengthened because of the network’s control mechanism after depositing ETH. Ethereum ETFs have generated more than $13 billion in inflows with most of those investments coming in the last six weeks.
Meanwhile, treasuries have mushroomed with BitMine Immersion, which pivoted its focus from Bitcoin mining earlier this year, growing its ETH holdings to $8.1 billion. The firm aims to accumulate 5% of the total Ethereum supply.
In addition, Otychenko also noted that network fees have dropped by nearly 40% over the past month, even as network activity reached record levels, “making staking more attractive and accessible.”
https://x.com/eth_everstake/status/1962900646383735137
Ethereum, the second largest cryptocurrency by market value, was recently trading at $4,416, up 4.6% over the past 24 hours, according to crypto markets data provider CoinGecko.
A Myriad Linea market shows that 77% of respondents believe that Ethereum will hit $5,000 by year’s end. (Disclosure: Myriad is a prediction market and engagement platform developed by Dastan, parent company of an editorially independent Decrypt.)
Rajiv Sawhney, head of international portfolio management at crypto asset management firm Wave Digital Assets, believes the recent surge stems partly from capital flowing toward ETH treasury management companies, which often stake ETH on behalf of others.
Sawhney said that investors are increasingly looking to shift their unstaked Ethereum into treasury companies to potentially “double or triple their money when lock-ups expire.” He noted the large investment by Cathie Wood’s ARK Investment Management into Bitmine last week.
He also highlighted the impressive returns of SharpLink’s (SBET) PIPE offering in May, after the company raised over $500 million in private capital from investors to invest in staked Ethereum. The online-marketer-turned treasury has accumulated about $3.6 billion in ETH since changing its purpose. Sawhney said these returns may encourage other investors.
Sawhney also pointed to an incident earlier in August, when the price of ETH and Lido Staked Ether (stETH) decoupled, forcing many leveraged investors to sell off and causing unusual patterns within the validator queues in the following weeks.
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