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Saturday Jun 03, 2023

Ethereum Outflow at Four-Year High

Crypto investors hope that the long-awaited transition of Ethereum to the proof-of-stake protocol will take place this year. This will save the network from expensive fees and allow it to compete with faster blockchains. Ethereum has already reduced its share from 96% in January 2021 to the current 52% in DeFi, and if Vitalik Buterin delays the move again, the network risks losing leadership in key areas.

Based on the roadmap, Ethereum has passed all the stages on the way to merging the two branches of ETH and ETH 2.0, and the date of the key event on the official website is the 2nd quarter of 2022. In anticipation of the upcoming changes, crypto users have increased the withdrawal of Ethereum to cold wallets, which is why the total balance of crypto exchanges has decreased to 21.7 million ETH. This is the minimum value since September 2018. At the same time, there is an acceleration in March: the weekly outflow exceeded 180 thousand. ETH ($512 million).

Despite the London hard fork and burning transaction fees, the network remains inflationary. In other words, more coins are mined than burned. However, with the transition to proof-of-stake, it can become completely deflationary, which in itself will increase the value of Ethereum.

The price is also supported by a general reduction in supply caused by the transfer of ETH to a deposit contract. At the moment, users have blocked 10.6 million ETH for a total of $30 billion, with about 1 million ETH added in the last 30 days. The total blocked amount is 9% of the total capitalization of the network, it will be available for withdrawal no earlier than the merger of the two branches.

Blocked funds allow you to receive passive income from staking.

The only limitation is that it is necessary to deposit in blocks of 32 ETH. But there are a number of services that allow you to combine smaller investments into pools. For example, Lido provides staking with a current yield of 3.8%, and the total amount in management exceeds 2.7 million ETH.

Interest in ETH 2.0 is on the rise – this is evidenced by both the outflow of funds from crypto exchanges and the deposit contract increasing in size. The only question is when it will happen.