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Glassnode Analyzes Impact of Restaking on Ethereum’s Monetary Role

Glassnode, a leading on-chain analytics platform, has delved into the implications of the burgeoning trend toward restaking protocols on Ethereum’s role as a monetary asset.

Recent developments, such as the introduction of EigenLayer and LRT staking protocols, have contributed to an increase in Ethereum’s share of staking, now accounting for 26% of the total supply. Analysts have observed a corresponding uptick in the overall growth of staked coins, with the figure reaching 31.4 million Ethereum (ETH) as of April 13.

Despite the increase in staked ETH, which reduces non-validator rewards, Glassnode warns that the total rewards paid could still contribute to inflation, particularly if a significant portion of assets remain locked.

Following the anticipated implementation of The Merge, which merges Ethereum’s current proof-of-work (PoW) consensus mechanism with the proof-of-stake (PoS) mechanism, the share of new coins in the total Ethereum supply is projected to reach 1.01%. During this transition period, approximately 3.55% of ETH is expected to be withdrawn from circulation.

Consequently, the remuneration level per validator for ensuring network security has dropped to 3.2% per annum. Glassnode also notes the rise of innovative practices such as MEV (Miner Extractable Value), liquid staking, restaking, and liquid restaking, which have expanded staking needs beyond their original scope. Notably, liquid restaking protocols now account for 27% of the coins sent to the deposit contract.

As more ETH is staked and inflationary effects begin to impact fewer holders, there is a potential wealth transfer to participants generating additional income from securing the network. However, experts caution that the increasing emphasis on real yield components could diminish Ethereum’s attractiveness as a monetary asset within its ecosystem over time.

The restaking sector has witnessed robust growth since the beginning of the year, with the total value locked (TVL) in restaking protocols surpassing $8 billion in early April. Leading the pack is the ether.fi project, boasting a TVL of $3.2 billion.

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