A new report from Kiln allows us to identify some observable trends among players in the Ethereum (ETH) community who have staked large amounts of Ether. Thus, we can see that given the answers given by the panel interviewed here, ETH staking should see increasing interest after the Shanghai update scheduled for next March.
Ether withdrawals planned for soon
According to a report by Kilna company specializing in staking solutions for companies, only 9% of individuals who deposited Ethers (ETH) in the form of staking would like to withdraw and recover these.
But first, a bit of context: following The Merge update implemented on the Ethereum blockchain last September, the network’s consensus method has been completely changed.
Effectively, proof of work method (PoW) under which Ethereum previously operated (just like Bitcoin) has been dropped in favor of proof of stakea method with a number of significant advantages, whether in terms of energy, the drastically extended field of technical possibilities, or even concerning the issue of the number of ETH per block, which has been reduced by a factor of 10 times its initial value.
Figure 1 – Key dates in the evolution of the Ethereum blockchain
Thus, following Ethereum’s switch to proof of stake, miners had to abandon their mining hardware and resolve to become network validators in order to continue to be rewarded for their participation in the proper functioning of the blockchain. Only condition for this: deposit 32 ETH in staking. A substantial sum, but fortunately, people wishing to stake their ETH to a lesser extent can do so by delegating them.
The ETH in question will thus remain blocked until the Shanghai update, which should be deployed on the mainnet sometime in March, according to the current developer schedule. Things also seem to be off to a good start, with the update having just been successfully completed on the Sepolia testnet, the last test before deployment on the Goerli testnet, which itself will give way to the mainnet afterwards.
Thus, a question arises: what will individuals who have staked their ETH decide to do once Shanghai is in place?
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What will validators do with their ETH?
After interviewing a panel of around 120 players who have deposited their ETH in staking, Kiln compiled their respective responses to provide a post-Shanghai perspective.. It should be noted that this data concerns a significant number of institutional players, who have large quantities of Ethers under management.
Thus, here are the key figures that we can observe following the different responses collected:
68% of entities surveyed plan to start staking their ETH or making it work through decentralized finance (DeFi) protocols; 70% of these will stake their ETH as soon as Shanghai rolls out or soon after;
And only 9% plan to withdraw their ETH.
Of the individuals interviewed, some are happy to be able to stake their ETH “natively” on the blockchain and no longer via liquid staking methods (like Lido or Rocket Pool):
“Since 2020, I already use a mix of liquid staking tokens (LST). With the Shanghai upgrade, I will complete my strategy with native staking. »
Others are concerned about a hypothetical drop in staking rewardsor a large output queue (for validators):
“I hope the staking rewards will still be good after the upgrade, but what worries me is the queue I’m likely to have. »
The validator output queue is indeed part of the concerns regarding the rollout of the Shanghai update. To find out more about the conditions for withdrawing ETH staked on Ethereum, we invite you to read our dedicated article.
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If we take a closer look to the 68% planning to put their ETH to work post-Shanghai, we can see that 35% of them plan to start staking their assets natively once withdrawals are allowed, and 33% of them will do so via DeFi protocols. In addition, 23% of the individuals in this panel declared that they “would not do anything”, and finally, 9% simply plan to stop staking with their Ethers.
Regarding the timeframe within which validators plan to touch their hitherto immobilized ETH, the latter is caused to vary. However, we can observe a certain trend within the panel questioned, since 42% of respondents want to stake their ETH as soon as possible. In addition, 28% of them plan to do the same ” not much time after the update is in place, while 25% plan to wait at least a few weeks.
Figure 2 – Graph of staking results
Finally, concerning players wishing to unstake their ETH, we observe that 44.5% of them wish to do so as soon as possible. However, the majority of the sample questioned (66.7%) only wishes to withdraw a small part of its staked ETH (less than 320 ETH), whereas 22% of the players questioned wish to withdraw an amount varying between 320 and 1 600ETH.
Just over 11% plan to withdraw a significant amount (from an institutional point of view) of ETH, i.e. more than 3,200 units.
Figure 3 – Respondents’ ETH unstaking data
In conclusion, this study makes it possible to identify certain trends concerning the post-Shanghai era. We can observe that, in general, players who deposited pre-Shanghai ETH remain quite interested in the possibility of continuing to make their Ethers work via staking, whether native or done through DeFi.
Moreover, between the deadlines desired by the latter and the real possibilities, it is possible that there is a gap due to this famous queue mentioned above, as confirmed by Laszlo Szabo, the CEO of Kiln:
“Knowing that 68% of participants confirmed that they wanted to stake or increase their stakes, we can imagine a growing demand after Shanghai. However, what many institutions and individuals forget are the entry and exit queuing mechanisms… The more people wishing to enter, the longer you will have to wait. »
Note also that currently, only 14.7% of Ethers in circulation are in staking, but this trend should evolve positively once the update is in place given the notable enthusiasm of the community for the post-Shanghai.
👉 If you would like to read the full report studied here, we invite you to download it directly from the Kiln website.
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Source data and illustrations: Kiln
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Passionate about the world of decentralized finance and the novelties brought by Web 3.0, I write articles for Cryptoast to help make blockchain more accessible to everyone. Convinced that cryptocurrencies will change the future very soon.
Maximilien Prue
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