The Ethereum 2.0 smart contract continues to generate interest from investors, hitting a new all-time high of 8.8 million ETH locked in staking. Despite the recent drop in ETH price, this still amounts to approximately over $30 billion AUD in locked ETH.
Share of staked Ether increasing
The total amount of Ether locked in the Ethereum 2.0 smart contract is surging. Recent data from Glassnode indicated that already more than 7% of the total ETH supply is staked in the ETH 2.0 contract. The amount locked reached an all-time high at the beginning of January, hitting 8,875,394 ETH. This represents a 70% increase since June 2021 and far exceeds the initial phase 0 target of 524,000 ETH.
More stakers are involved as well, with the total number of unique depositors more than doubling from 27,132 to 59,867 in the latter half of 2021. Equally, the number of validators has grown from 152,000 in June to 276,197 at the beginning of January, even though the annual yield on staked Ethereum is only 5%.
The data indicates continued bullish sentiment among the Ethereum community for Ether’s long-term prospects. As both deposits and rewards can only be withdrawn after phase 1.5 of the network upgrade goes live, stakers are betting on a rising ETH price in the long run.
When is Ethereum 2.0 coming?
However, Ethereum 2.0 is not for impatient investors, as the network upgrade has been plagued by a constant stream of delays and technical difficulties, which have resulted in repeated setbacks for the network’s upgrade plans.
Although Ethereum has suffered from network congestion more than ever in 2021, its community has not abandoned ambitious native scaling plans for Ethereum. Well aware of the persistent problems and delays in the roadmap, Vitalik Buterin has called on external scaling solutions to come to the rescue and relieve some of the most immediate pain on the network. In particular, he called on zero-knowledge rollups to fill the need for faster transactions while the Ethereum network was working on its sophisticated 2.0 solution.
However, with markets experiencing the most pain since bear market drawdowns in 2018, only the most dedicated members of the Ethereum community will have the conviction to continue working on a solution that has been years in the making.
Could regulation add additional pain?
Looming in the background is the persistent danger of the Securities and Exchange Commission opening an investigation into Ether being a security, something its Chairman Gary Gensler has repeatedly expressed interest in.
Possible regulation of Ether as a security would not be a killer blow for Ethereum, but much of the network’s competitive advantage vis-a-vis payment processors like Visa and Mastercard would disappear that way. Ethereum 2.0 stakers are betting on the community delivering a solution before politicians decide to take action, as a fully scaled and well-oiled Ethereum network would function as the backbone for many other financial transactions and interfering with it would likely be not well-received by the companies using it.
Ethereum thus finds itself battling with opponents on all fronts, something that during the honeymoon period of the 2021 bull run seemed like a distant memory from worse times.
