Weekly Ethereum Staking Deposits Hit Record Low Just Weeks Before Merge
With less than a month to go until Ethereum’s transition to proof of stake, the number of weekly ETH deposits sent for staking the Beacon Chain hit an all-time low, as per data from Dune Analytics.
The second-largest cryptocurrency is set to transition from the proof of work (PoW) consensus mechanism to a more environmentally friendly proof of stake (PoS) mechanism next month, with the much-anticipated event known as the merge attracting plenty of attention.
The Beacon Chain—the PoS-based coordination mechanism of the new network—has been running in parallel with Ethereum’s current mainnet since December 2020, when investors were first invited to deposit their coins to operate as validators.
The total amount of ETH deposited to the Beacon chain is currently standing at over 13.3 million, which represents 11.18% of Ethereum’s circulating supply.
However, the number of weekly ETH deposits has been steadily declining since the beginning of May, recently reaching the lowest levels ever seen.
The week ending August 22 saw just 12,377 deposits to the Beacon Chain—a sharp contrast to more than 500,000 deposits made throughout the week ending March 14.
Under a month before the merge and the amount of $ETH sent to the Beacon Chain for staking is at all time lows lately 🥩🤔Source 👉 — hildobby ＞|＜ (@hildobby_) August 22, 2022
Market momentum or speculations?
There could be several reasons as to why this is happening, with one of the factors being that those who wanted to stake had already done so, Hildebert Moulié, a data scientist at Dragonfly Capital who goes by the handle hildobby on Twitter, told Decrypt, pointing to the fact that more than 10% of Ethereum’s circulating supply has been already staked.
“Others may want to wait post merge to make sure nothing goes wrong then,” Moulié told Decrypt.
He also suggested that the sharp decline in the number of weekly ETH deposits to the Beacon Chain could be related to speculation. Some investors might believe that short-term ROI could potentially be higher if they just hold their coins in the hope of getting some ETHPOW—the cryptocurrency that could result from a controversial attempt to resist the Merge via an Ethereum hard fork.
Lastly, Moulié also pointed to the market momentum, which “has been quite terrible lately,” and could fend off those considering depositing their ETH.
Ethereum is up 4.4% over the past 24 hours, trading around $1,640 by press time, however, is down more than 55% since the start of the year.Source