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Coinbase Reports a Decrease in Investor Appetite for Ether Staking Yields

Oct 18, 2023 at 06:51 am

The report indicates that staking yields have experienced a decline from over 5% to 3.5% in recent months.

Coinbase's research report, released on Friday, highlights a noteworthy development in the Ethereum blockchain. For the first time since the Shanghai upgrade in May, the validator queue has emptied. This event signifies a potential stabilization in investor interest regarding ether (ETH) staking.

Validators play a crucial role in the network by confirming transactions in exchange for rewards, achieved by locking up ether. The Shanghai upgrade introduced the capability to withdraw staked ether for the first time.

As the validator entry reached its maximum capacity in recent months, staking yields have seen a decrease, now standing at 3.5% compared to the previous figure of over 5%.

According to analysts David Duong and David Han, the yield on staked ether establishes a baseline for the entire crypto ecosystem. It serves as a benchmark for evaluating alternative crypto investments.

Coinbase anticipates that, provided underlying activities and transaction fees on the network remain consistent, the staking yield will likely remain stable now that validator growth has slowed down.

The third quarter saw consistent activity on the Ethereum mainnet, with a notable increase in total rollup transactions, as mentioned in the report.

Looking ahead, the report suggests that until the Dencun upgrade, expected in the first half of 2024, there are no major Ethereum protocol updates anticipated to significantly impact onchain activity, barring the introduction of new protocols or major security breaches.

The forthcoming Dencun upgrade encompasses five Ethereum Improvement Proposals (EIPs) focused on expanding data storage capacity and reducing fees on the blockchain.

Read more: SOL Unstaking Unveiled: A Deep Dive

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