Ethereum’s Validator Waitlist Reaches Highest Level Since October
The waitlist for new Ethereum validators has hit its highest level since early October, signaling a renewed interest in staking. Despite the yield on staked ether remaining below 4%, the Ethereum network is experiencing a surge in the number of validators looking to stake their ether (ETH).
According to data source ValidatorQueue, the validator entry queue has soared to 7,045, representing over 225,000 ether ($562 million). It is expected to be cleared in just over 48 hours.
Ethereum imposes limits on the number of new validators that can join the network per epoch, resulting in a backlog. An epoch, which refers to the time it takes to process blocks on the blockchain, lasts 6.4 minutes.
Validators are entities that stake a minimum of 32 ether in the network to participate in running Ethereum’s proof-of-stake consensus blockchain. In return for staking ether, they receive a steady rate of return similar to interest income from fixed-income instruments such as bonds.
David Lawant, head of research at institutional crypto exchange FalconX, stated that the resurgence in Ethereum staking activity is a sign of renewed vitality. He noted that the increased activation queue is significant, considering there has been little improvement in the annualized percentage yield on staked ether.
CoinDesk’s composite ether staking rate has remained between 3.5% and 4% for the past four months, offering minimal premium compared to the yield on the 10-year U.S. Treasury note.
While the number of stakers looking to join the network has jumped, it is still below the figures seen after Ethereum’s Shapella upgrade in April 2021, which allowed withdrawals of staked ether for the first time. This de-risked the process of locking coins in return for rewards.
Additionally, the waitlist for validators looking to exit experienced a brief spike in early January after failed crypto lender Celsius revealed plans to unstake its entire ether holdings.
Ether, the native cryptocurrency of the Ethereum network, saw a 10% increase last week, but it underperformed compared to bitcoin’s 14.5% gain. The lack of clarity on the potential launch of U.S.-based spot ETFs and the categorization of ether by the SEC have seemingly deterred traders from aggressively buying ether.
Market participants are eagerly awaiting whether ETH ETFs will be allowed to stake coins, which will be evident in the S-1 amendments filed by Ark/21Shares ahead of the key date on May 23.
Analyst comment
Positive news: The waitlist for new Ethereum validators has reached its highest level since October, indicating renewed interest in staking. The surge in validators looking to stake their ether suggests increased vitality in the Ethereum network. The backlog is expected to be cleared in just over 48 hours.
As an analyst: The increased activity in Ethereum staking is a positive sign for the market. It shows continued interest in the network despite a relatively low yield on staked ether. This could potentially lead to increased demand for ether and further market growth in the near term.
