A little more than 72% of Ethereum (ETH) tokens are freely available, after staking deposits accelerated in the past months. Liquid re-staking is the biggest factor for locked tokens in 2024.
Staking accelerated for Ethereum, based on 32-ETH deposits to the main smart contract. Based on deposits and withdrawals, about 27.5% of the total ETH supply is staked, with only 72.5% remaining. Some of the remaining tokens may also be illiquid, either held in long-term wallets or in other vaults or protocols.
More than 91% of staked ETH is in the money as of June 17. The biggest deposits were made around the $1,600 and $1,900 price range.
46.3M ETH are in locked deposits
Ethereum’s network switched to net deposits in June, and overall deposits have dominated. Top ETH staking entities include the leading centralized exchanges, Coinbase, Binance, and Kraken. Additionally, staking deposits come from leading liquid staking protocols like Lido DAO.
Read: Grayscale Holds Discounted ETH Tokens: Will the Portfolio Survive the Denial of an Ethereum ETF?
The Beacon deposit contract reports 46.3M ETH deposited in total. The percentage of locked supply is now higher than the Ethereum Foundation allocation, estimated at 2.9M tokens. ETH supply has been distributed unevenly, with around 40% of the first 60M tokens set aside for the ICO token sale. Since the launch of Ethereum, around 49% of the total supply was produced by miners and only a relatively small share was created by validators with proof-of-stake.
ETH locked in DeFi protocols doubled in 2024
Additionally, ETH locked in DeFi protocols has doubled since the start of 2024, to around $62B in value. Around 17M ETH are estimated to be part of some form of DeFi, as wrapped ETH or another form of collateral. This further cuts into the supply of tokens available.
Daily, 2,622 new ETH are created by a process of proof-of-stake. The reward is distributed among more than 1M validators. Additionally, some of the ETH used for fees is burned, causing the Ethereum blockchain to be slightly deflationary. More than 4.4M ETH has been destroyed, keeping the supply stable at around 120M tokens.
Also read: Ethereum restaking presents opportunities and risks in DeFi landscape
Another 15M ETH is held by three top exchanges, Binance, Huobi Global, and OKEx. Whales also hold for the long term, though the biggest single known person to hold ETH is Vitalik Buterin. Even his reserves amount to around 245K ETH.
Even with the relatively large supply, the amount of available ETH is limited and may be enough for only a handful of big projects. Additional ETH may be locked in the treasuries of older startups. This brings the amount of available ETH potentially to under 50% of the overall supply.
Within the limits of DeFi, ETH tokens can actually be multiplied. The presence of Liquid Staking Tokens (LST) generates more layers of liquidity, based on a single locked ETH token in collateral.
ETH is going through a supply crunch
The crunch in ETH supply arrives at a time when physical tokens may be needed to supply the upcoming ETF products. The potential launch date for the creation of funds is set at some time at the end of the summer. The news already caused significant withdrawals from Coinbase, with one transaction at more than 336K ETH.
Additionally, staking accelerated between May 21, with another 500K ETH locked in just a few weeks. One of the reasons for the supply crunch is the diversity of projects to mop up ETH from small or bigger users. Lido DAO remains the top staking entity, responsible for around 27% locked ETH in the smart contract.
Other protocols are also advertising the opportunity to stake ETH in exchange for other valuable tokens and accrued rewards. The latest growth of staking also created 10,000 new validators in less than a month. Staking is also competitive as the Ethereum network cannot expand with an indefinite number of validators, and will start to reach the technological limitations of consensus.
Recently, MetaMask also started its own staking pool, with a feature available for investors excluding the USA and the United Kingdom. Other staking protocols like Rocket Pool expect to boost the ease of staking by only requiring ETH deposits.
Cryptopolitan reporting by Hristina Vasileva
