Potential Ethereum Staking Constraints Rapidly Approaching
The world of Ethereum (ETH) staking is experiencing a significant surge, as companies, exchange-traded funds (ETFs), and individual investors pile into the onchain activity.
Currently, companies such as Bitmine Immersion, Ether Machine, and Sharplink Gaming hold a combined 4.99 million ETH, worth an impressive $22.97 billion. This substantial holding is not far from matching the holdings of spot ETH ETFs. Notably, Bitmine Immersion, the largest ETH digital asset treasury with $9.9 billion of the asset, has yet to begin staking, which could have a significant impact on the entry queue once it does.
The U.S. Securities and Exchange Commission (SEC) is expected to approve ETFs that will begin staking their assets this fall. This move could potentially lead to a massive inflow of ETF funds, further increasing the entry queue. Mara Schmeidt, CEO of Alluvial, predicts this could result in a significant rise in the entry queue.
Liquid staking, liquid restaking, and staking pool participation have all seen a marked increase in recent months, indicating the rise of this onchain activity. EigenLayer leads the liquid restaking ecosystem with a $19 billion TVL, while Rocket Pool's rETH has a $2.8 billion TVL, emphasizing decentralization with a greater number of solo stakers than Lido.
The network's validator entry queue has been historically high since The Merge in September 2022. As of Sept. 18, the Ethereum network's validator entry queue stands at 422,143 tokens, worth $1.94 billion at today's prices. On Sept. 9, Kiln, a $15 billion staking provider, pre-emptively unstaked all of its ETH, causing the exit queue to jump from a little over 500,000 ETH to more than 2.5 million tokens.
Staking ETH yields 2.91% annually, according to the Composite Ether Staking Rate (CESR). Lido (stETH) controls approximately 24% of all staked ETH with a TVL of $37 billion, showing sustained demand. Ether.fi exceeds $11 billion TVL with innovative strategies, boosting ETHFI's potential.
Historically, Q4 has been a bullish period for crypto, and it is expected that ETH will see another price surge during Q4. This, coupled with the growing interest in staking, could further fuel the surge in Ethereum staking.
However, it's important to note that other companies accumulating ETH treasuries without staking were not explicitly mentioned in the sources. Bit Digital, on the other hand, holds a large ETH treasury and has staked about 86.6% of its holdings, actively participating in Ethereum staking. Renzo's ezETH holds $1.5 billion TVL, and ETHZilla, which raised additional funds in the last quarter and plans to deploy $100 million in Ethereum to EtherFi for restaking yield, has not yet entered traditional Ethereum staking.
Kam Bambrik, head of research at Chorus One, expects the entry queue to rise further, driven largely by Bitmine Immersion. This anticipation underscores the current trend towards increased Ethereum staking and the potential impact of major players entering the market.
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