The number of ETH staked has surged. Who is helping Ethereum 2.0 reach its staking target?

The entry of institutional supporters may be the reason for the rapid achievement of the Ethereum 2.0 genesis block staking target.

Written by: Twenty-three Painting Students

Five days ago (13:00 on November 19), the ETH deposited in the ETH2.0 genesis block only accounted for 19.58% of the total target (524,288 ETH). At that time, 15 days had passed since the ETH 2.0 deposit contract address was released. On the decentralized prediction platform Polymarket, investors predict that the probability of ETH 2.0 being launched on time is only 39%.

On November 24, OKLink data showed that the balance of the Ethereum 2.0 deposit contract address has reached 524,288 ETH, meeting the minimum requirement for launching the Ethereum 2.0 Genesis Block, which means that the Ethereum Genesis Block will be mined on December 1 as scheduled. Why is the number of ETH pledged increasing so rapidly? And which market players mainly use these pledged ETH?

Why did the staked coins in the ETH genesis block surge?

Some people speculate that after the end of Uniswap's initial liquidity mining plan, part of the funds will flow into the ETH 2.0 genesis block to participate in staking.

Uniswap's initial liquidity mining plan ended on November 17. As of 15:30 on the same day, Uniswap's total locked-up amount had shrunk significantly to $1.94 billion, a decrease of 39.25%. Calculated in absolute terms (based on the current locked-up amount and the magnitude of the change), the total amount of funds flowing out of Uniswap is about $1.25 billion, while the total amount of funds flowing into Sushiswap today is only about $220 million. The latter has only taken over about 17.5% of the former's outflow of funds, and some other DeFi applications with a lower base have not taken over too much outflow of funds. It is very likely that part of this part of funds will flow into the ETH 2.0 genesis block to participate in staking.

Uniswap's liquidity mining ended on the 17th, but the amount of funds flowing into the ETH 2.0 genesis block for staking did not increase much on that day. This is because the staking yield of ETH 2.0 is not very high, and it is not very attractive to those funds participating in liquidity mining. It seems that the funds flowing into Uniswap are not the main reason for pushing the ETH2.0 deposit contract to reach its target.

So what is the main reason for the rapid growth of ETH2.0 Genesis Block staking? Let’s first look at a market trend chart.

As can be seen from the market trend chart, ETH has continued to rise sharply in recent days, and the sharp rise in ETH began on November 24. As we mentioned above, for more than half a month, the pledge completion rate of ETH 2.0 deposit contracts did not exceed 20%. Starting from the 20th, its pledge speed began to accelerate significantly.

There is a strong positive correlation between the ETH market trend and the staking speed of the ETH2.0 genesis block. Therefore, we have reason to speculate that funds bought ETH in the secondary market and deposited it in the ETH 2.0 genesis block for staking. As the ETH price rises, the yield of ETH 2.0 staking also begins to rise, further attracting capital inflows.

Who staked in the Ethereum 2.0 genesis block?

The Ethereum 2.0 Genesis block staking growth process can be divided into three stages, namely November 5-November 14, November 14-November 19, and November 20-November 24, among which the fastest growth is the last stage.

In the first phase, the deposit and pledge of ETH2.0 may mainly come from Ethereum developers, represented by Vitalik Buterin. In the ETH2.0 Genesis block, the ETH deposited by users needs to be locked for at least one to two years. Currently, ETH 2.0 has only launched the deposit function, and does not support transfers. Transfer transactions will not be supported until Phase 2 (at least one year later) is launched. According to the current staking income, the highest is only 17%. At the moment when the price of the currency is rising, many users consider that the risk of ETH price decline in the future cannot cover the income, so they are relatively cautious when staking. Developers represented by Vitalik Buterin took the lead in depositing their own Ethereum, which has an exemplary role and helps to dispel people's concerns about security.

In the second phase, the deposits and pledges of ETH2.0 mainly come from Ethereum big users (some are miners, project parties) and technology enthusiasts. On November 20, more than 25% of the deposits of the 105,000 ETH in the current Ethereum 2.0 deposit contract address came from three whales. According to the analysis of Bison Trails protocol expert Viktor Bunin, one of the ETH whales deposited 17,088 ETH on November 14. These ETH were purchased at a price of $300 during the bull market in 2017 and held in different addresses for more than three years. Another ETH whale deposited 5,504 ETH, which was ETH that began to be hoarded four years ago. There is also an ETH whale that deposited 5,024 ETH, which is ETH held for three years. The whale also holds another 15,000 ETH. Zhao Changpeng, who is a technical background, also said on Twitter, "I may buy 32 ETH to support the upgrade of Ethereum."

The third phase is mainly for institutional supporters who are optimistic about the development of Ethereum, which is also the reason why the ETH 2.0 Genesis Block pledge quickly reached the minimum target. For example, on November 22, Swiss crypto asset broker Bitcoin Suisse announced that its Ethereum 2.0 staking service has received more than 71,891 ETH, equivalent to approximately US$33 million, and stated that a total of 131,328 ETH has been locked in the deposit contract.