Ethereum Stakers Are Losing

Ethereum stakers have run into problems amid the fall in the price of ETH. Only 20% of them now remain in the profit zone.

Despite the protracted crypto winter, Ethereum staking has continued to be a popular activity among members of the crypto community. However, the more ETH depreciates, the fewer stakers remain in the profit zone.

According to the latest data from Dune Analytics, most members of the crypto community who have staked their coins in the Ethereum ecosystem are now in the red zone and are suffering losses. Only those who have locked their ETH on staking at a rate below current price levels remain in the profit zone (in the money).

According to Dune Analytics data, this is only about 20% of all coins placed on staking:

Among the coins remaining in the green zone, a large category of coins priced at $600 attracts attention. They were staked in December 2020 when the Beacon Chain network was launched as a key element in the transition of the entire Ethereum blockchain from the Proof-of-Work (PoW) algorithm to the energy-efficient Proof-of-Stake (PoS) proof-of-stake algorithm.

On that day, the ETH exchange rate was about $600, which is about half the current rate. Meanwhile, about 80% of the coins were locked in the protocol at $1,200 or higher.

However, it is too early to sound the alarm. Most of the early stakers knew from the beginning that they were investing coins for the long term. As a rule, the blocking period for coins was about two years.

According to Dune, there are currently 15.9 million ETH staking in the protocol. This is approximately 13.2% of the total supply of coins, which at the current rate is about $20 billion.

Since mid-November, the weekly rate of coins placed on staking has dropped sharply and now remains near the minimum values. So, according to Dune, over the past week, it amounted to 25,000 ETH. Meanwhile, before the resonant collapse of the FTX crypto exchange, more than 150,000 ETH was blocked on staking every week.

In November, Ethereum developers announced the start of the long-awaited withdrawal of coins from staking in the test network mode. A full-fledged launch of the functionality will be deployed as part of the Shanghai update, promised to users in March this year. It will allow all validators to withdraw some of their money from staking and receive a reward.

At the same time, the developers have confirmed that they will release the Shanghai update without EIP-4844 in order to eliminate delays in the withdrawal of funds from staking, which is now a top priority.

If by this time the ETH rate cannot significantly strengthen, then it is hardly worth fearing a massive withdrawal of funds from staking. Long-term investors would rather maintain the status quo and be rewarded as validators than take coins and sell them at a loss.

Meanwhile, Ethereum enthusiasts keep reminding that the Ethereum PoS model is economically healthy, stakers are making profits, and “the revolution is not being reported quarterly.”

The ETH exchange rate has strengthened a little this week, but continues to remain in the range. At the time of writing, the price of the coin was about $1250, which is the highest level since mid-December. However, this is still 74+% below the all-time high reached in November 2021.


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