Main Points:
- Ethereum validators increased by 30% over the past year, surpassing one million in June 2024.
- Liquid staking and restaking are attracting institutional investors.
- Ethereum staking grew significantly due to the Shanghai Upgrade and the approval of Ethereum ETFs.
- Polygon’s staking activity also saw substantial growth, with validators stabilizing due to a cap.
The number of Ethereum validators has surged dramatically over the past year, highlighting the growing interest in institutional adoption of cryptocurrency staking mechanisms. This trend is particularly notable in the liquid staking and restaking sectors, where institutional players are driving demand for more capital-efficient ways to participate in Ethereum’s Proof-of-Stake (PoS) system.
Ethereum Validators Increase by 30% in One Year
A recent report by Flipside Crypto, shared with Cointelegraph, revealed that the number of Ethereum validators grew by over 30% in the past year, reaching over one million by June 2024. This marks a significant milestone for the Ethereum network, which continues to benefit from increased staking activity. As of September 2023, the validator count stood at 824,300.
This increase in validators is not only a sign of Ethereum’s growing user base but also a reflection of the rising interest in more sophisticated staking strategies, particularly among institutional investors. According to Carlos Mercado, a data scientist at Flipside Crypto, the uptick in validator participation can be attributed to advancements in liquid staking and restaking protocols, which offer new ways for validators and stakers to maximize their capital efficiency.
The Rise of Liquid Staking and Restaking
Mercado explains that liquid staking and restaking protocols, such as Lido’s stETH and Rocket Pool’s rETH, allow validators to restake their liquid staking derivatives to secure and validate other networks. These assets can also be deployed across decentralized finance (DeFi) protocols, generating additional yield for participants. This capability has attracted institutional investors who are looking for ways to circumvent the illiquidity traditionally associated with staking and unlock more capital efficiency through leverage.
This growth in liquid staking is a key factor in Ethereum’s validator increase. It enables stakers to avoid the withdrawal periods imposed by the Ethereum Beacon Chain, allowing for immediate liquidity. Restaking further enhances this process, enabling capital to flow more freely and efficiently within the ecosystem.
Shanghai Upgrade and Ethereum ETFs Fuel Staking Growth
The total amount of staked Ethereum has also seen considerable growth, increasing by over 27% over the past year and exceeding 34.7 million ETH in September 2023. This expansion is largely driven by Ethereum’s Shanghai Upgrade and the approval of the first Ethereum futures exchange-traded funds (ETFs), both of which have brought significant attention to the staking ecosystem.
The Shanghai Upgrade, implemented in April 2023, allowed network participants to unstake their ETH for the first time since Ethereum’s transition to PoS during the Merge. This was a significant development for Ethereum’s network and created a major inflection point for stakers, giving them greater flexibility and liquidity. Additionally, the introduction of Ethereum ETFs opened the door for institutional investors to gain exposure to Ethereum’s staking returns, driving further interest and participation.
Polygon’s Staking Activity Also on the Rise
Ethereum is not the only blockchain benefiting from increased staking activity. Polygon’s PoS network has also experienced a substantial increase in staking participation. Over the past year, the number of Polygon wallets engaging in staking rose by over 36.4%. However, the number of Polygon-based validators has remained stable since June 2024 due to the blockchain’s validator cap, which limits the number of active validators.
Despite this cap, staking activity on Polygon has continued to grow, indicating that the potential decrease in staking rewards has not deterred participants. The increased participation on Polygon further emphasizes the broader trend of growing interest in staking across multiple blockchain networks.
The rise in Ethereum validators and the broader growth in staking activity, including on networks like Polygon, point to a thriving staking ecosystem that is increasingly attracting institutional attention. Liquid staking and restaking protocols are playing a crucial role in this trend, providing participants with new ways to maximize their capital efficiency. The Shanghai Upgrade and the introduction of Ethereum ETFs have further accelerated staking growth, creating a dynamic and evolving environment for both retail and institutional investors.
With institutional adoption continuing to rise, the future of staking looks promising. As more investors and platforms explore innovative staking solutions, the potential for further growth in the validator ecosystem remains strong. These developments not only enhance the security and scalability of blockchain networks but also create new opportunities for investors seeking yield in the decentralized finance space.
