Staked Ether Deposits Up 500% Since Shapella

In the lead-up to Ethereum’s recent Shapella upgrades, pundits debated whether activating staked Ether withdrawals would lead to a flood of ETH entering the markets and pushing down prices, or whether it would bolster staking participation.

Now, one month after the upgrade went live, the results appear to be in. While the queue for staked ETH withdrawals has steadily decreased since Shapella, ConsenSys’ Michiel Milanovic told The Defiant that daily staking deposits are up 500%.

“There are 19.3M ETH, including rewards, on the Beacon Chain today, equivalent to the amount of ETH on the Beacon Chain during the time of the Shapella upgrade, meaning that it has had a net zero impact on the network so far,” Nansen said in a May 9 report.

Data from Nansen shows top staking providers Lido, Binance, Coinbase, Kiln, and Stakefish account for deposits of more than 1M Ether over the past month.

Roughly 16% of Ether’s circulating supply is currently staked, according to Beaconcha.in.

Centralized Exchanges Dominate Withdrawal Requests

Nansen data also shows that centralized exchanges account for 73% of staked ETH withdrawal requests. However, Nansen asserts that the majority of withdrawn ETH is used for the centralized exchanges’ “internal operations” rather than for selling.

Kraken, a U.S.-based exchange, represents 26% of all staked Ether withdrawals to date with 647,000 ETH. Kraken agreed to shut down its custodial staking service as part of a settlement with the U.S. Securities and Exchange Commission in February.

Coinbase ranks second by withdrawal volume with 344,000 ETH.

The pace of withdrawals has slowed, however. “The majority of entities are currently holding onto their remaining staked ETH balance for now,” Nansen said.

Bear Case

In spite of Ethereum’s improving staking statistics, researchers at Deribit, a crypto derivatives exchange, believe that Ether may soon post a significant pullback.

Deribit told The Defiant that Ether price volatility tagged a new all-time low last weekend, according to its DVOL index.

“The market continues to anticipate that if ETH volatility resurfaces, it will occur on the downside and in the near-term,” Deribit said. “We believe a significant shift in ETH volatility will only occur if the downside support in the $1700/$1800 range is breached, which has yet to happen.”

Derebit added that Ether flows in its options markets began exhibiting bearish signals this week after the Ethereum Foundation transferred $30M worth of ETH to Kraken on May 6.