Ether Staking Doubles As The Merge Edges Closer

The amount of Ether (ETH) staked has surged by over 100% on a year-over-year basis and these tokens represent over 11% of the total supply of the world's second-biggest cryptocurrency.

Arcane Research, a blockchain analysis company, noted in a report published last month that although "the price of ETH has declined by 51% YoY, the amount of staked ETH has more than doubled: from 6.5 million to 13.4 million."

Ether staking was introduced with the concept of the Ethereum Merge a few years ago. Staking is a process wherein the crypto investments are frozen in a platform while investors earn rewards for it.

However, Ether staking has one major risk, i.e., the staked tokens won't be available for withdrawal until the Merge process is complete. Hence, Binance BETH and Lido DAO's stETH, which represent the amount of Ether staked by an Ethereum user, come to play and help investors spend their tokens.

"Because staking is high risk, the vast majority of ETH remains unstaked, but when withdrawals are unlocked (scheduled for 2023, after the merge), yield play might be the safest macro play," the Arcane report said.

Additionally, the Merge will see the transition of the Ethereum network from a proof-of-work network like Bitcoin (BTC) to a proof-of-stake network. Interestingly, the tentative date for the Merge has been decided as Sept. 15.

Developers have already completed the final Georli testnet after the Ropsten and Sepolia testnets.

"A successful Merge = chain finalizes. Sure, the participation rate dropped and looks like there may have been an issue with one of the clients but the Merge worked. We'll likely see minor issues like this with the upgrade on mainnet too but the point is, the Merge worked," Christine Kim, a research associate at the investment firm Galaxy Digital, commented about the Geroli testnet completion.