The Ethereum network has experienced remarkable growth in its validator count, driven by increasing institutional interest. Over the past year, the number of Ethereum validators surged by more than 30%, crossing the milestone of one million validators for the first time in June 2024. According to a report by Flipside Crypto, this growth is a clear indicator of how institutions are embracing Ethereum and staking innovations like restaking and liquid staking.
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What’s Driving This Growth?
One of the key factors behind this rapid increase in Ethereum validators is the rise of restaking and liquid staking protocols. These innovations have piqued the interest of institutional players due to their ability to provide liquidity and enhanced capital efficiency.
Carlos Mercado, a data scientist at Flipside Crypto, explained:
“The rise of liquid staking and more recently restaking has enticed institutions interested in both immediate liquidity (i.e., bypassing the withdrawal periods of Beacon Chain via liquid staked tokens) and enhanced capital efficiency from restaking.”
Validators and stakers can now utilize liquid staking derivative tokens like Lido’s stETH and RocketPool’s rETH, not only to secure the Ethereum network but also to earn additional yield across other decentralized finance (DeFi) platforms.
The Impact of Ethereum’s Shanghai Upgrade
The Shanghai upgrade in April 2023 was another pivotal moment for Ethereum staking. This upgrade allowed network participants to unstake their Ether for the first time since the transition to proof-of-stake (PoS) during the Ethereum Merge. The ability to unstake ETH brought a wave of new participants, as staked Ether surpassed 34.7 million ETH by September 2024 — a 27% increase in just one year.
Adding to this momentum, the introduction of Ethereum futures exchange-traded funds (ETFs) further boosted confidence and participation in the staking ecosystem. These developments provided institutional investors with new avenues to gain exposure to Ethereum, fueling the validator and staking growth.
Cross-Chain Staking Growth: Polygon in the Spotlight
Ethereum isn’t the only blockchain seeing a surge in staking activity. Polygon’s PoS network, for instance, witnessed a 36.4% increase in the number of wallets involved in staking over the past year. Although the number of Polygon validators remained unchanged due to a validator cap, the rising participation demonstrates the growing appeal of staking across multiple networks.
Conclusion
Ethereum’s validator growth, driven by institutional adoption, liquid staking, and staking protocol innovations, is a testament to the network’s ongoing evolution. The Shanghai upgrade and Ethereum ETFs have further solidified Ethereum as a leader in the blockchain space, attracting both retail and institutional players. With staking activity also gaining traction on other chains like Polygon, it’s clear that staking is here to stay as a cornerstone of blockchain ecosystems.
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