The Ethereum network’s validator queue has experienced a significant decline in recent months, signaling a decrease in staking demand. At its peak in early June, the queue had over 96,000 validators, but it now stands at just 598, the lowest it has been since the “Shapella” upgrade in April.
The dwindling validator queue reflects the changing landscape of staking on the Ethereum network. Previously, individuals faced a long wait of 45 days to become validators, driven by high demand to stake Ethereum’s native token, ETH. However, the expected waiting time has now dropped to less than four hours, highlighting the decline in staking demand.
The decline in staking demand can be attributed to the Shapella upgrade, which allowed for the withdrawal of staked ETH for the first time. This reduced the risk for investors and likely contributed to a decrease in interest in staking on the Ethereum network.
The decrease in staking demand has also resulted in a decline in staking rewards. Earlier in the year, stakers could expect rewards of 5% to 6%, but this has now decreased to around 3.5%. Lower network activity generating fees and an increasing number of stakers have contributed to this decline.
In comparison to other proof-of-stake networks like Solana, Cardano, and Avalanche, Ethereum’s staking ratio, which measures the share of tokens staked relative to the total supply, stands at over 22% since April. However, it still lags behind its competitors, with staking ratios ranging from 53% to 69%.
Overall, the dwindling validator queue and declining staking demand on the Ethereum network reflect a shift in investor sentiment and interest in staking. While Ethereum still has a significant staking ratio compared to other networks, it will be important for the Ethereum ecosystem to address the factors contributing to the decline in order to maintain its competitive edge in the staking market.
(Note: The original article did not mention the original author.)