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Luke Nolan, a researcher at CoinShares, claims that the 50% statistic is ‘inaccurate, or at least materially misleading’ and asserts that the proportion of staked ether is closer to 30% of the total supply. This sentiment is echoed by Aleksandr Vat from Ethplorer.io.
(Midjourney/Modified by CoinDesk)
What to know:
- Over half of all ether ever created has gone through Ethereum’s proof-of-stake deposit contract, yet analysts assert this inflates the actual amount of ETH that is locked.
- On-chain metrics indicate approximately 37 million ETH, roughly 31% of the total supply, is currently staked, which is significantly lower than the nearly 80 million ETH that have cumulatively entered the Beacon deposit contract.
- This milestone highlights the increasing significance of staking within Ethereum’s economic framework, with some investors comparing ETH to a “digital bond,” while critics caution that significant players now dominate validator expansion.
Ethereum has achieved a notable milestone, with more than half of the total ether (ETH) issued now residing in its proof-of-stake (PoS) contract for the first time in the network’s 11-year existence, according to Santiment, which has faced criticism for its announcement.
The on-chain analytics company stated on Tuesday that 50.18% of all historically issued ETH is now held in the staking deposit contract. This statistic represents the cumulative ETH that has been deposited into the contract since the introduction of staking prior to the network’s transition from proof-of-work to PoS in 2022.
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As per CoinDesk data, the total supply of ether stands at 120.69 million tokens. Bitmine, the largest ether-focused treasury firm globally, possesses 4.29 million ETH, with 2.9 million of that amount staked. Arkham data reveals that the largest holder is the Eth2 Beacon Deposit Contract, containing 77.1 million ETH, which accounts for over 60% of the total supply. This contract holds the largest quantity as it acts as the central, mandatory access point for staking to secure the blockchain. Following Beacon are Binance with 4.1 million ETH, BlackRock with 3.4 million, and Coinbase with 2.9 million.
While the tokens are staked, they are not transferable or tradable. Withdrawals have been permitted since the Shanghai upgrade in 2023, enabling validators to leave and reintroduce ETH into circulation.
This distinction has led some analysts to advise caution in interpreting the 50% statistic as a permanent supply lock.
‘Inaccurate and materially misleading’
“The post is inaccurate, or at least materially misleading,” Luke Nolan, senior research associate at CoinShares, informed CoinDesk. “It references the one-way deposit contract utilized for ETH staking but fails to consider withdrawals. While ETH is deposited into that contract when validators stake, it is not a permanent sink.”
Since the activation of withdrawals, ETH can exit the validator set and return to circulation, implying that solely examining the deposit contract balance may exaggerate the amount effectively staked, Nolan indicated.
“There is also a crucial nuance regarding the figures being referenced,” he added. “It is inaccurate to assert that over 80 million ETH are currently staked. Approximately 80 million ETH have historically passed through the staking contract, but the amount actively staked today is around 37 million ETH, which is roughly 30% of the current circulating supply. This distinction significantly alters the narrative.”
Aleksandr Vat, BizDev at Ethplorer.io, concurred with Nolan and provided CoinDesk with corroborating data that underscores that distinction.
The Beacon deposit contract balance on the Etherscan tracker, currently around 80.97 million ETH, reflects total deposits since its inception and does not decrease when validators withdraw. Withdrawals are managed by minting ETH back to execution-layer addresses instead of deducting from the deposit contract itself, Vat explained.
Based on active staking metrics, approximately 37,253,430 ETH are presently staked, according to data from Ethplorer and CryptoQuant, indicating that staking makes up 30.8% of the total supply.
Santiment’s 50% figure seems to compare the cumulative Beacon contract balance to the historically issued supply prior to EIP-1559 burns, Vat noted. Although that may be mathematically valid depending on the denominator utilized, it does not accurately reflect the amount of ETH currently locked or removed from circulation, he pointed out.
Ethereum matures into ‘digital bond’
Nevertheless, this milestone emphasizes the central role that staking plays in Ethereum’s economic architecture, according to Vineet Budki, partner and CEO at Sigma Capital, who spoke with CoinDesk. As participation increases, a larger portion of ETH generates yield through validator rewards, solidifying its status as a yield-bearing crypto asset. He perceives this development as an indication of Ethereum’s maturation into what he refers to as a “digital bond.”
“Ethereum’s milestone of 50% staked supply signifies its transformation into a digital bond, where the network’s security is driven by long-term commitment rather than short-term speculation,” Budki stated. “By securing half of the total issuance in a one-way vault, the protocol has created a structural supply shortage.”
Budki also highlighted rising network activity, including a 125% year-over-year surge in daily transactions, a doubling of daily active addresses, and an uptick in tokenized real-world assets, much of which occurs on layer-2 networks that settle back to Ethereum’s base layer.
However, Nolan noted that recent validator growth has been concentrated among larger participants.
“A significant proportion of recent validator entries has been influenced by major entities like Bitmine and U.S.-listed ETFs, which have captured a considerable share of the entry queue,” he observed.
As staking levels continue to rise, the discussion illustrates how Ethereum’s supply metrics, and the manner in which they are presented, can notably influence market narratives, Budki concluded.
