The Ethereum network is experiencing a surge in interest from validators seeking to stake their ether (ETH), with the validator entry queue reaching its highest level since October 6, according to data from ValidatorQueue. The queue, currently standing at 7,045 validators, representing over 225,000 ether (approximately $562 million), is expected to clear within just over 48 hours.
Validators, who stake a minimum of 32 ether to participate in Ethereum’s proof-of-stake consensus blockchain, are contributing to the backlog as Ethereum limits the number of new validators per epoch. This backlog underscores a renewed vitality in Ethereum staking activity, according to David Lawant, head of research at FalconX.
Lawant noted that despite the increase in staking activity, the annualized percentage yield on staked ether has seen little to no improvement. CoinDesk’s composite ether staking rate has remained between 3.5% and 4% for the past four months, offering minimal premium compared to the 10-year U.S. Treasury note’s risk-free rate of 4.17%.
While the number of validators seeking to join the network has risen, it remains below the levels observed following Ethereum’s Shapella upgrade in April last year, which allowed withdrawals of staked ether for the first time, reducing the risk associated with locking coins.
Additionally, the waitlist for validators looking to exit saw a brief spike in early January after Celsius, a failed crypto lender, announced plans to unstake its entire ether holdings. Despite Ethereum’s recent price increase, it has underperformed compared to bitcoin and the CoinDesk 20 Index, potentially due to uncertainty surrounding the launch of U.S.-based spot ETFs and the need for clarity in the SEC’s categorization of ether.
Lawant highlighted the anticipation surrounding the potential launch of ETH ETFs, which could have implications for staking activity. As Ethereum’s staking ecosystem continues to evolve, the influx of validators signals growing confidence in the network’s future and the potential rewards offered by staking.