On April 12, Ethereum’s Shanghai upgrade was successfully implemented allowing the withdrawal of staked ETH and effectively finalizing the network’s years-long transition to proof of stake.
The network achieved another milestone as the upgrade catalyzed a record-breaking weekly inflow of ETH [ether] deposits for staking, primarily driven by institutional staking service providers and investors reinvested profits following withdrawal.
Data from Dune Analytics showed that roughly 571950 Eth tokens valued at more than $1 billion, were deposited by investors into staking contracts.
As per blockchain data given by 21Shares, this was the greatest weekly token influx in the approximately two and a half years that ether staking has been active.
A previous analysis from Nansen, a blockchain analytics firm revealed that the amount of Ethereum staked on April 17th was greater than the amount withdrawn for the first time.
Lido Finance is in the lead among ETH depositors, holding 30.9% of the total ETH staked. 24.4% of deposits come from other depositors, including Coinbase [12.7%] and Kraken [6.9%], as reported by TronWeekly.
Ethereum’s highly awaited hard fork known as the Shanghai or Shapella upgrade allowed for the withdrawal of roughly 18 million tokens, totaling $35 billion, that had been locked up in staking contracts.
According to some experts, this facilitation of withdrawals also lowered the liquidity risk related to locking up ETH for staking, which in the past deterred some investors.
Ethereum Hard Fork Boost Institutional Staking
“We expect this to naturally increase staking rates after the initial drawdown of ETH from long-term validators,” Michiel Milanovic, analyst of Ethereum blockchain developer firm ConsenSys stated.
In a survey conducted by Kiln, an institutional-grade staking service provider, it was found that nearly 70% of investors planned to start staking or increase their staked amount following Shanghai.
The survey was carried out in February before the Shanghai upgrade.
Even traditional finance [TradFi] firms have expressed renewed interest in staking, Thomas de Phuoc, Kiln’s co-founder, and the chief operating officer said.
“Our sales team noted 60% more deals in the pipeline than at the same time last year, including from traditional institutions,” Phuoc said. “We are discussing at the moment with some brokerage firms, investment banking services holding companies in the U.S. or in Europe.”