ETH Coins Stake See $33M Inflow Thanks to Ethereum PoS Upgrade: Nansen

Summary:

  • On-chain analytics startup Nansen reported massive inflows of staked Ether tokens after the merger.
  • Ethereum’s proof-of-stake upgrade was successfully shipped on September 15, EWN reported.
  • “Smart money” investors have used over $33 million in locked Ether coins in the past week alone.
  • Ethereum’s upgrade called the merger seemingly boosted investor faith in protocols like Lido after a troubling depeg event in June.

A Nansen report showed that staked Ether (ETH) tokens, such as Lido’s stETH, enjoyed inflows of more than $33 million in the past seven days following the merger, Ethereum’s pivotal transition from proof of work to proof of stake. The successful upgrade went live on September 15th.

Nansen’s report explained that “smart money” investors are going all in and spending big on staking ETH coins to secure returns and play a critical role in the Ethereum ecosystem after the recent PoS upgrade.

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Unlike a PoW blockchain where miners receive rewards and incentives in exchange for securing the network and validating transactions, a PoS network relies on players with locked tokens for such operations. In the case of Ethereum, staked Ether plays a key role in the new upgraded chain.

Investors held their breath after stETH decayed in June

Similar to stablecoins that derive their value through a peg to another asset such as the US dollar, staked Ether also boasts a peg to the value of ETH. It’s worth noting that investors remained cautious in the weeks leading up to the merger after Lido’s Ether product lost its peg in June.

Lido Finance offers liquid betting services for native tokens on blockchains such as Ethereum and Polygon. Liquid Staking allows players to deposit crypto like Ether and receive another token. Users can then deploy this token elsewhere while the crypto stake pays or returns.

At the time of publication, Lido boasts over 30% market share for Ethereum staking.

However, players were supposedly thrown into uncertainty in June 2022 when stETH was delinked from ETH. At the time, industry concerns were at their peak due to the crash of TerraUSD (UST), a stablecoin that lost its peg and also caused LUNA to fall.

stETH fell as much as $0.93 for every dollar of ETH during the depeg period. Lido Finance assured punters that the increased spread did not pose a serious threat to the chips bet through the service.

Lido’s staking product has since recovered and climbed back up to $0.97 for every dollar of ETH.

Faith In Staked ETH Restored After Merger

After a successful Merger, investors looking to earn returns on their Ether stake are said to have shown renewed optimism in leveraging services like Lido. Lido’s APR for staked Ether has also increased to 5.5% from 4 before the Merger.

Another service Rocket Pool also raised in April per reports. Exchanges like Binance, Coinbase and Kraken also have their respective staking services for Ether and other crypto assets.

In addition, medium-term players could target Ethereum for cumulative returns, as the withdrawal option for staked ETH will not open until 2022. ETH developers plan to launch an update called “Shanghai” to boost stakes of ETH withdrawals.

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