Ethereum Staking Reaches 35 Million ETH Locked Amid Regulatory Clarity

The supply of staked Ether has reached an unprecedented high, with over 35 million ETH coins now locked under the Ethereum blockchain’s proof-of-stake consensus model. This milestone indicates a growing investor confidence and a significant reduction in the liquid supply of the world’s second-largest cryptocurrency. According to data from Dune Analytics, over 28.3% of the total Ether supply is now locked into smart contracts, making it unsellable for a predetermined period in exchange for generating passive income for investors.

This trend suggests that a substantial portion of investors are opting to hold their ETH rather than selling at current prices. The staked supply has seen a notable increase, with over 500,000 ETH staked in the first half of June alone. This surge in staking activity signals rising confidence and a continued drop in liquid supply, as noted by pseudonymous CryptoQuant author Onchainschool. Ether accumulation addresses, which are holders with no history of selling, have also reached an all-time high of 22.8 million in ETH holdings. This further underscores Ethereum's strength as a crypto asset in terms of long-term fundamentals and investor conviction.

The recent rise in staking coincides with a more favorable regulatory outlook in the US. Nearly three weeks after the US Securities and Exchange Commission (SEC) released new guidance on cryptocurrency staking, the record high in staked Ether was achieved. The SEC’s Division of Corporation Finance stated that “Protocol Staking Activities,” such as cryptocurrencies staked in a proof-of-stake blockchain, “don’t need to register with the Commission transactions under the Securities Act.” This guidance is widely seen as a victory for crypto regulations, providing clarity and support for the staking ecosystem.

However, industry participants are still awaiting the approval of the first Ether staking ETFs. The SEC delayed its decision on Bitwise’s application to add staking to its Ether ETF on May 21, leaving the future of such financial products uncertain. Despite this, the staking landscape continues to evolve, with Lido accounting for 25% of the staked Ether supply. Binance holds 7.5% of the staked Ether supply, and Coinbase holds 7.4%, according to Dune data. Coinbase exchange also became Ethereum’s largest node operator, holding over 11.4% of staked Ether supply through its validators.

While decentralization purists have criticized the growing Ether supply staked through liquid staking protocols as a potential centralization risk, institutional adoption has seen a significant uptick. The development of liquid staking infrastructure has facilitated this growth, with a significant percentage of Lido’s total value locked (TVL) already coming from institutions. This trend highlights the increasing demand for staking solutions among institutional investors, despite concerns about centralization.