I was looking at on-chain data just now and found it interesting that Ethereum staking has already surpassed 50% of the total supply. I mean, more than half of all ETH that exists is now locked in staking. This is somewhat historic considering that a few years ago most people didn’t even think about staking.

What draws attention is how this changes the network security game. The more ETH is locked, the more expensive it becomes to attack the blockchain. And with Ethereum’s maximum supply being fixed, the more tokens in staking, the less circulating in the market. This might explain why volatility has been a bit lower lately.

Looking at the history, it went from around 11.7% right after the Merge in 2022 to where we are now. Rapid growth indeed. Some analysts believe it will keep rising, especially if the market turns more bearish and people prefer earning yield instead of trading.

The technical side is also interesting because it changes how tokenomics works. With more validators sharing rewards, the distribution of new ETH becomes more decentralized. And considering that Ethereum’s maximum supply is defined, this concentration in staking significantly affects the supply and demand dynamics.

The question remaining is whether this will create liquidity issues for applications that need ETH for fees. But the community is monitoring this. In any case, it shows that the protocol’s design is working even in downturn cycles.