Almost two months after the Shanghai upgrade, staked Ether continues to gain prominence.
As trust in traditional banking systems dwindles due to the US debt ceiling saga, staked Ether (ETH) levels have soared to unprecedented heights.
The quantity of staked ETH reached a record of approximately 2.96 million in May 2023, equivalent to around 2.46% of the entire ETH supply.
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ETH staking in May, discounting withdrawals, has more than doubled the second-largest staking sum, which occurred in February 2022.
According to Brian McColl, a research analyst, this historic surge in ETH staking could be attributed to several factors, with the US debt ceiling issue being the most noteworthy.
The event has undermined confidence in the US dollar and contributed to the decline of banks. He stated:
The US Debt ceiling saga and the earlier events with banks going bankrupt surely affected Ether’s popularity and more and more users prefer to stake their money in ETH rather than keep them in the bank.
McColl further added that the present annual percentage rate (APR) of approximately 5.4% provides superior deposit conditions than most global banks, making Ethereum staking an increasingly attractive option in May.
Following the much-awaited Shanghai upgrade on April 12th, validators were granted the option to withdraw their staked ETH after two years. This event sparked speculations about a potential ETH sell-off, which could pose a bearish threat to the Ethereum network.
Contrary to expectations, less than 1% of the total staked ETH was estimated to have been sold post-Shapella.
Within the first week following the unstaking event, validators withdrew nearly a million ETH from the Beacon chain. Nonetheless, by the start of May, the quantity of staked ETH exceeded the withdrawals. Currently, almost 18% of all ETH staking occurred in May.
Despite President Joe Biden and House Majority Leader Representative Kevin McCarthy reportedly agreeing to raise the debt ceiling to $31.4 trillion, influential financial analysts, including BlackRock CEO Laurence Fink, have cautioned that this drama could undermine global trust in the US dollar.
The soaring popularity of ETH staking amidst the backdrop of traditional banking skepticism reaffirms the significant role of cryptocurrencies in today's economy.