Over $12 Billion Worth of ETH is Now Staked on Ethereum 2.0
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Over $12 Billion Worth of ETH is Now Staked on Ethereum 2.0

We are seeing financial history being written in real-time — and Ethereum is poised to play a major role.
Neither the author, Tim Fries, nor this website, The Tokenist, provide financial advice. Please consult our website policy prior to making financial decisions.

As projected, Ethereum’s ongoing upgrade makes it one of the most coveted projects in the digital asset space. In the anticipation of the successful transition to Ethereum 2.0, over $12 billion worth of ETH have already been staked.

Ethereum Validator Staking Reaches Nearly a Quarter of DeFi Staking

At the end of March, the Tokenist reported on a reasonable forecast that Ethereum would end up as the winner of the smart contract wars. At the time, it seemed that Binance Smart Chain (BSC) would end up dominating the DeFi space, serving as its low-fee, fast-lane infrastructure. In May, even Uniswap decentralized exchange (DEX) had been outstripped by BSC’s PancakeSwap in terms of user count by 723%.

However, if you understand the scope of Ethereum’s ongoing upgrades, it was not too difficult to view these trends as transient. Just ahead of Ethereum’s London hard fork next month, that forecast is solidifying.

Currently, the Ethereum 2.0 network has 5,923,578 ETH staked with 179,825 validators partaking in its new proof-of-stake consensus. Given ETH’s current price at $2,105, this amounts to $12.46 billion. Comparably, this is 23.5% of the TVL (total value locked) in the entire DeFi space.

Image credit: The Tokenist, data source: defipulse.com

Of course, TVL should not be confused with market cap. The former refers to crypto assets staked as collateral across DeFi protocols. In the case of Ethereum itself, one would need a minimum of 32 ETH ($67.6k) staked to become a validator. This would then activate the validating software, making your computer a cog of the future of finance – storing the Ethereum blockchain, adding new blocks, and processing transactions.

Speaking of transactions, ETH gas fee is at its lowest point since December of 2020, at $3.76 per transaction.

Image credit: ycharts.com

To become truly competitive with the likes of BSC, Polkadot, Cardano, Solana and other smart contract blockchain alternatives, ETH gas fees will have to go under $1 in the long run. This has been projected to happen by the hotly-anticipated EIP 1559, starting in July as a part of the London hard fork.

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Is the Price of Ether Going to the Sky?

If we take a macro-view of the trends, there is a strong case to be made that Ethereum’s current price is heavily undervalued. Without major civilizational disruptions, we are on a trajectory to see 63% yearly growth in the crypto space by 2024, ending up with 4.3 billion crypto users by the end of the decade.

Crypto adoption rate by 2030, image credit: crypto.com, source: World Bank

This will likely be accelerated by historic cash deposits in US banks, accounting for $2 trillion, as reported by FDIC (Federal Deposit Insurance Corporation) on June 25th. All that cash sits on near-zero yield accounts at the same time as ETH 2.0 offers 6.4% APR. Not to be confused with APY (annual percentage yield), APR (annual percentage rate) doesn’t take into account compound interest.

For those seeking to earn interest or borrow assets against collateral, Compound DeFi protocol has made a major move yesterday. With a current market cap at $6.35 billion, Compound announced yesterday a new feature – Compound Treasury for institutional investors. By offering 4% APY for clients who transfer USD into their Compound Treasury account, they will be immediately better off than settling for traditional dollar savings accounts.

Lastly, in anticipation of lower gas fees, activity with Ethereum wallets has – for the first time – surpassed Bitcoin addresses.

With Ethereum shaping up as The decentralized network that has what it takes to replace both banks and payment processors, the future certainly looks bright – despite the hurdles in Ethereum 2.0’s timeline.

Do you tend to invest in specific DeFi protocols, or the Ethereum network itself which hosts the bulk of them? Let us know in the comments below.

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