Ethereum Nearing Queue Clearance for Validators

• Latest data discloses that the queue of new validators on the Ethereum blockchain is almost cleared out.

• This is said to indicate a weak staking demand compared to how the network was congested at its peak. 

Ethereum (ETH), with a bearish market sentiment, is currently trading at $1,584.36. According to reports, Ethereum has a weak staking demand. This is evident in the recent report that the queue of new validators on the blockchain is almost cleared out.

The first time this was ever recorded this year was in April, when the “Shapella” upgrade was launched, marking the transition from the proof of work to the proof of stake algorithm. In early June, as many as 96,000 validators were waiting in the queue.

As of the time of writing, only 598 validators are waiting for their turn. This indicates that the waiting time for new validators to be added to the network has been reduced to less than 5 hours. This is a significant reduction from the 45-day waiting time due to the increased demand to stake ETH. 

Binance stated that it would take from 15 days to several weeks to process their transactions at that time.

Due to the processing limitations on the Ethereum network, Binance will set a daily ETH redemption quota for each Binance user.

At that time, about $1.4 billion worth of ETH was stuck in the withdrawal queue. Experts attributed the delay to the limits in the amount of transactions the blockchain can process. Nansen analyst Martin Lee disclosed that the network can process 1,800 validator withdrawals per day. That was approximately $115 million. He further stated that the limit on validator withdrawals was implemented for security reasons. 

In an extreme scenario, if there are no limits, and a large majority of validators exit, the Ethereum network would be vulnerable to attacks and bad actors.

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Ethereum (ETH) Price Declines 

The recent move to Poof of Stake demands that validators maintain the network and verify transactions by locking up ETH in exchange for a staking reward. The Shapella upgrade, therefore, enabled validators to withdraw their staking rewards for the first time. This triggered a significant flow of funds into the blockchain’s staking mechanism. 

According to David Lawant, head of research at institutional crypto exchange FalconX, the empty activation queue indicates that the growth of staked ETH has slowed down. It is important to note that the staking rewards were around 5 percent to 6 percent at the beginning of the year. This has reduced to 3.5 percent. 

Composite Ether Staking Rate (CESR), attributes this to the moderate network activity to generate revenue from fees as well as the increasing number of stakers. The staking ratio of Ethereum which represents the share of tokens staked and the total supply, has increased to more than 22 percent. This was around 15 percent in April, and 6.5 percent in September. Comparatively, Solana’s ratio is 69 percent, Cardano has 63 percent and Avalanche has 53 percent. 

As of press time, Ethereum was trading at $1,573.14 after declining by 0.35 percent in the last seven days. In the last 24 hours, the asset has fallen by 0.89 percent. 

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