Ethereum, the decentralized and open-source blockchain platform, has recently achieved a notable milestone as its total supply of Ether (ETH) has surpassed 120 million. This increase in supply coincides with a significant uptick in both staking and restaking activities, bolstering the platform’s proof-of-stake (PoS) consensus mechanism. At the time of writing, ETH is trading at $2,660 on Gate.io crypto exchange.
Recent data from Ultrasound.money indicates that Ethereum’s total supply now stands at approximately 120 million ETH, with over 77,000 ETH having been issued in the past 30 days alone.
We take a look at how latest news affect the price of ETH and investigate new staking trends and tools.
Supply and Restaking Growth
In the last 30 days, while 77,091 ETH were issued, the network also saw 19,438 ETH burned through Ethereum’s burn mechanism. This resulted in a net supply increase of about 57,653 ETH. Currently, the supply growth rate is calculated at 0.58% annually, with a slight uptick to 0.69% over the past week, according to Ultrasound.money.
Ethereum’s burn mechanism, which was introduced during the London Hard Fork, initially set the stage for a deflationary supply trend. However, with new issuance now surpassing the burn rate, Ethereum is experiencing an inflationary phase.
Ethereum’s transition from a proof-of-work to a proof-of-stake model has not only enhanced the network’s security but also increased participation rewards for users. At present, approximately 33.9 million ETH, valued at over half a trillion dollars, is staked, accruing rewards in newly issued ETH. This, in turn, adds to the overall supply growth. The impact of this is magnified by the rise in restaking activities, where users reinvest their staking rewards, leading to even more ETH being issued.
One of the platforms driving this restaking trend, EigenLayer, saw an 11% increase in its total value locked (TVL) over the span of a week, indicating a growing interest in restaking as users lock up Wrapped Ether (WETH) for additional rewards. This growth is also reflected in other restaking platforms like Symbiotic and Karak, which highlights a broader trend that may be contributing to Ethereum’s current inflationary supply dynamics.
New to Restaking?
It is an advanced and relatively new process that lives on blockchain ecosystems, particularly in proof-of-stake (PoS) networks like Ethereum, where users re-delegate or reinvest the rewards they earn from staking and staked ETH. In traditional staking, users lock up a certain amount of their cryptocurrency to support the network’s operations, such as validating transactions. In return, they receive rewards in the form of newly issued tokens.
Restaking takes this process a step further. Instead of withdrawing their staking rewards or letting them sit idle, users can reinvest these rewards back into the staking pool. The same also applies to staked ETH which is converted into an LST. This compounding process increases the amount of cryptocurrency being staked, which in turn can lead to higher future rewards. Essentially, restaking allows users to maximize their staking returns by continuously reinvesting their earnings.
The concept of restaking is particularly appealing as it enhances the network’s security and stability by increasing the amount of cryptocurrency that is locked up in the staking process. Additionally, it can lead to higher overall issuance of new tokens, as more staking rewards are continuously compounded. This dynamic can impact the total supply of the cryptocurrency, potentially leading to inflationary trends if the rate of new token issuance outpaces mechanisms like token burns.
Main Restaking Protocols
Restaking is an emerging trend in the Ethereum ecosystem, and several protocols have been developed to facilitate this process, allowing users to earn additional rewards by staking their assets across multiple platforms simultaneously. The primary purpose of restaking is to leverage the security and staking infrastructure of Ethereum to support other networks or decentralized services, thereby maximizing returns for stakers.
EigenLayer is one of the most prominent restaking protocols. It allows Ethereum validators to “restake” their Ether (ETH) on third-party protocols, thereby extending the security of Ethereum to these external services. This setup enables developers to bootstrap new projects without needing to establish their own validator networks. EigenLayer’s approach has quickly gained traction, with a significant amount of ETH being restaked through the platform, reflecting the growing interest in this model.
Pendle Finance is another key player in the restaking space. It supports liquid restaking tokens (LRTs), which allow users to gain exposure to future yield from staking rewards. Pendle has seen substantial growth due to its innovative market for trading these tokens, making it a popular choice among speculative investors seeking to maximize their returns through leveraged exposure.
Restake Finance and Puffer Finance are other notable restaking protocols. Restake Finance focuses on providing a modular liquid staking solution for EigenLayer, allowing users to earn both Ethereum staking rewards and native rewards from EigenLayer without needing to lock up their assets. Puffer Finance, on the other hand, offers a dual-reward mechanism, where users earn rewards from both Proof of Stake (PoS) validation and restaking activities. Both protocols have seen rapid adoption, with significant total value locked (TVL) within a short period, underscoring the growing importance of restaking in the Ethereum ecosystem.
Lastly, Renzo Protocol operates as a strategy manager within the EigenLayer ecosystem, simplifying the restaking process and offering higher yields than traditional Ethereum staking. Renzo has quickly become a key player in promoting the widespread adoption of EigenLayer by abstracting the complexities involved in restaking.
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