The Ethereum network’s validator queue, which has remained empty since the Shanghai update in May, suggests a significant decrease in investor demand for Ether staking. This information, obtained from the blockchain data report provided by Validator Queues, reveals that only a few validators are currently in the Ethereum network entry and exit queue, and their initiation process is almost instant.
Decrease in Validators in the Queue
The report indicates that on June 10, the queue to stake ETH on the PoS network had approximately 96,508 validators. However, there are currently no validators in the entry queue, a sharp decline from its previous peak earlier this year. This decline has implications for the overall staking landscape. Unlike earlier in June when validators had to wait for an average of 45 days and 22 hours in the queue, the average wait time (queue) for validators to join the blockchain network is now zero minutes.
The Impact of the Shanghai Upgrade
With the activation and exit limit for validators, known as Churn Limit, increasing from 12 to 13 epochs, a daily limit of 2,925 validators can now join or exit the Ethereum network. This dwindling rate of entry and exit queues for validators is the first of its kind since the introduction of the “Shanghai” or Shapella upgrade in April. The upgrade marked Ethereum’s transition to a highly anticipated and fully functional proof-of-stake network (PoS), which attracted institutional investors to deposit large amounts of ETH.
Validators play a crucial role in maintaining and securing Ethereum’s proof-of-stake blockchain by locking up their Ether and earning staking rewards in return. Previously, validators were unable to withdraw their staked ETH, which caused concerns among investors about potential risks. However, the ability to withdraw staked funds was later granted, providing reassurance to stakeholders. Unfortunately, the demand for staking ETH has started to cool off.
According to Glassnode’s Ethereum on-chain data metrics, staking rewards have dropped significantly from 7% earlier this year to nearly 3.3%. Despite the decrease in yields, there was an increase of $47 million in ETH supply last week. Analysts attribute this increase to a decline in transaction activity over the past few days.
Interestingly, while the demand for staking ETH has declined, the number of active validators has increased. Validator Queues reports that there are currently 861,938 active validators on the Ethereum network, with approximately 22.79% of the cryptocurrency’s supply staked. This counterintuitive trend may be driven by the growing popularity of liquid staking platforms such as Rocket Pool and Lido, which have a combined Total Value Locked (TVL) of a remarkable $15 billion.
