This surge in Eth stakers is expanding the staking pool, which has led to a debate in the Ethereum community.
Let’s discover more about Ethereum’s staking in this article.
Rising ETH Stakers Ignite Community Debate
Due to increased activities in the Ethereum staking pool, the community proposed slowing down the Ethereum issuance rate. If this happens, what’s the fate of ETH stakers? Stakers’ rewards will be reduced compared to their earnings from the staking pool. The proposal will increase the value of ETH over staked ETH; stETH.
According to Glassnode, the rapid increase in ETH staking led to over 31.4 million ETH in the staking pool, which is 26% of the total supply of Ethereum. The Eigenlayer protocol introduced innovations that would solve significant issues encountered with staking. They are Restaking and liquidity restaking.
The #Ethereum community is debating a change to the ETH monetary policy, following a proposal aimed at constraining the rapid expansion of the staking pool.
This is motivated by a surge in demand for Liquid Staking and Restaking protocols.
Discover more in the latest Week… pic.twitter.com/aSErpKC2sv
— glassnode (@glassnode) April 16, 2024
Every blockchain network has a mechanism to oversee its activities. The Ethereum network uses the Proof-of-Stake mechanism, which decreases rewards whenever the staked ETH increases. With a 31.4 million staked ETH rise, validators earn 3.2% yearly. The innovation on Eigenlayer protocols increased the number of stakers.
Staking Growth: Liquid Restaking
When you stake funds via Eigen’s liquid restaking, you earn liquid versions of your funds in return. So, you get a 63% liquid version of your staked funds. An increase in stETH could reduce the value of ETH for ETH holders.
In Q1 2024, the trend of DeFi went in one direction, up ⬆️
DeFi TVL increased by 65.6% QoQ to reach $101 billion, this uptick was primarily driven by asset price appreciation and liquid restaking.
Explore the full report on the State of DeFi ⬇️ https://t.co/6ZoyFJTv6w pic.twitter.com/awOtGZV5u1
— Messari (@MessariCrypto) April 18, 2024
For ETH to continuously maintain its value, the community proposed a switch in ETH’s monetary policy. The Ethereum network also made a few upgrades that significantly reduced the growth of ETH staking pools.
Conclusion
According to Glassnode, over 31.4 million ETH staked could lead to a decline in Ethereum’s value for transactional purposes. The idea proposed by the community will face many dismissals, especially by ETH stakers, but this is for the good of ETH and the community. Follow through with our blog updates to know what’s next in this debate.
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