Ether staking, once a popular investment choice, has lost its appeal as falling yields prompt investors to reconsider traditional financial assets. The annualized yield for Ether staking now stands at a mere 3.5%, according to David Lawant of FalconX, dipping below the 5% offered by US government bonds. This shift underscores a move away from the pandemic-era environment of low-interest rates towards more conventional investments.
The decline in Ether staking demand is evident in the data from the Validator Queue, which indicates a significant reduction in the waiting list for validators on the Ethereum network. The number of validators directly impacts the staking rewards, and this decrease signals a waning enthusiasm for Ether staking.
In the aftermath of Ethereum network upgrades, services like Lido and Rocket Pool (NASDAQ: POOL) emerged, simplifying access to staking rewards. However, strategists at JPMorgan Chase & Co. (NYSE: JPM), including Nikolaos Panigirtzoglou, argue that this surge in accessibility has unfavorably impacted Ether’s yield appeal compared to conventional financial assets.
Notably, other blockchains such as Solana and Cardano also employ staking mechanisms. Approximately 72% of Solana’s SOL token and 63% of Cardano’s ADA token are currently locked in staking, while Ethereum lags behind with a staking ratio of only 22.6%. This stands in contrast to Bitcoin’s approach, which does not utilize staking as a method for validating transactions.
Data from the Dune Analytics dashboard, provided by 21Shares AG, reveals a significant decline in the number of Ether coins staked from May to September, particularly during a period marked by a downturn in the digital asset market. Despite a year-to-date increase in Ether’s value, it trails behind Bitcoin’s rapid surge, driven in part by speculation regarding the potential approval of Bitcoin exchange-traded funds in the United States.
According to digital asset research firm Kaiko, Ether’s price saw a modest 1% rise to $1,581, while Bitcoin managed to gain 1.7%, reaching $29,211 on a recent Friday.
