The Ethereum network is witnessing a surge in validator interest, with a notable increase in those seeking to stake their Ethereum (ETH).
As per ValidatorQueue, the current validator entry queue has reached 7,045, totaling over 225,000 Ether (equivalent to $562 million). This marks the highest level since October 2023.
It’s projected that the backlog will be cleared in just over 48 hours.
This backlog arises due to Ethereum’s restrictions on the number of new validators allowed to join the network per epoch. Each Ethereum epoch spans approximately 6.4 minutes.
Validators are individuals or entities that stake a minimum of 32 Ether in the network, granting them the ability to partake in the proof-of-stake consensus blockchain operations of Ethereum.
In exchange for staking their Ether, validators earn a consistent rate of return, akin to interest income from fixed-income investments such as bonds.
Ethereum Staking Finds Renewed Interest
The recent surge in Ethereum staking activity is interpreted as an early indicator of renewed vigor within the network.
David Lawant, Head of Research at institutional crypto exchange FalconX, emphasized the significance of the rise in the activation queue.
However, Lawant pointed out that the annualized percentage yield on staked ether has seen minimal improvement.
Over the past four months, the composite Ether staking rate has consistently ranged between 3.5% and 4%, offering only a marginal premium compared to the yield of the risk-free rate on the 10-year U.S. Treasury note, presently standing at 4.17%.
Although there has been a notable increase in the number of validators seeking to join the network, it still falls short of the levels observed following Ethereum’s Shapella upgrade in April of the prior year.
The Shapella upgrade introduced the capability to withdraw staked ether for the first time, thereby reducing the risk associated with locking coins in exchange for rewards.
Validator Exit Surged After Celsius Unstaking
In early January, the waitlist for validators seeking to exit briefly spiked following the announcement by failed crypto lender Celsius of its plans to unstake its entire ether holdings.
Despite these fluctuations, Ether’s recent price performance has been relatively subdued compared to Bitcoin and the broader cryptocurrency market.
The uncertainty surrounding the potential launch of U.S.-based spot exchange-traded funds (ETFs) later this year, coupled with the need for clarity regarding the Securities and Exchange Commission’s (SEC) classification of Ether, has likely contributed to cautious trading activity in the market.
Traders are eagerly awaiting confirmation on whether ETH ETFs will be permitted to stake coins.
The forthcoming revisions to the S-1 forms, such as Ark/21Shares’ recent addition of a staking component, suggest the potential for such advancements.
Meanwhile, Ethereum’s NFT market has witnessed a surge in trading activity, with weekly volume reaching its highest level since February 2023.
In the past week alone, NFT sales on the Ethereum network soared by approximately 100%, totaling an impressive $158 million.
The uptick in Ethereum NFT volume aligns with the increasing popularity of the Pudgy Penguins collection, currently ranked third by market capitalization.