06 May 2022 15:30, UTC
Reading time: ~2 m
The Ethereum Beacon Chain now holds 10% of all outstanding ETH Coins on Stacking.
Where 10% of all coins are held Ethereum
According to Ethereum Launchpad, the figure of ETH coins placed on the Beacon Chain network staking reached a significant milestone, despite the decline in the coin’s exchange rate. This value has surpassed the 12 million ETH mark.
According to CoinMarketCap, the circulating supply of ETH is now over 120 million (12,341,535 as of this writing). Accordingly, 10% of all existing coins are now in stacking. At the current exchange rate, this is equivalent to $34 billion.
Read also: Beacon Chain added 50,000 new validators in just one month
As a reminder, the network Beacon Chain was launched in December 2020 as a key element in the entire blockchain transition from the energy-intensive Proof-of-Work (PoW) algorithm to the Proof-of-Share protocol Proof–of–Stake (PoS). This means that transactions will not be confirmed by miners, but by nodes (nodes) managed by stackers.
The annual staking fee is now about 4.4%. This is much lower than in the past, when the revenues of the network’s first stackers were in the double digits. Nevertheless, it is a competitive rate compared to the leading traditional banks working with fiat currency deposits.
Read also: What is Ethereum stacking and how to make money from it
Are liquidations to be feared?
There are, however, concerns among members of the cryptocurrency community about The Merge’s planned update later this year, which will mark the transition to PoS.
As some believe, this update could cause a mass exodus of stackers from the Ethereum network as their assets will finally be unlocked. This could lead to mass liquidations, increasing downward pressure on the ETH exchange rate.
However, loyal enthusiasts of this ecosystem do not believe in such a scenario. As Anthony Sassano, founder of Ethhub, wrote back in February, “withdrawals will not be possible before six months after The Merge is implemented, and even then the maximum daily outflow of funds will be, in my opinion, about 30 thousand.
Read also.: What is Ethereum 2.0 and what the move to PoS will lead to
Optimists believe that Ethereum’s move to a greener mechanism will improve its image in the eyes of companies and lawmakers. In addition, the EIP-1559 update will cause ETH’s inflation rate to fall. Recall, it burns a certain amount of ETH with each transaction, which should cause a deflationary effect in the long run.
According to tracker Ultrasound.Money, 2.27 million ETH worth about $6.25 billion have been burned so far. The tracker estimates that once The Merge is implemented, at the current rate of coin burning, the stock will decline by 2.1% per year.
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