Blockchain data shows that the Ethereum validator queue has shrunk by a large amount over the last few months, potentially signalling a decline in staking demand.
Ethereum's validator queue is getting cleared out! This could indicate a temporary dip in staking demand, but let's not forget the bigger picture – #Ethereum's potential is still sky-high! Keep an eye on this space, folks. #CryptoNews #Staking $ETH #NFTs #NFT #PAKvSL pic.twitter.com/XqMY1lWt5U
— ⚡ Mr. Crypto Giants🐋 (@CryptoGiants_) October 12, 2023
In June, there were around 96,600 validators in the queue to stake ETH on the Proof-of-Stake blockchain. Currently, there are only 223 validators in the entry queue – a far cry from the peak earlier this year.
The average wait time for a validator to join the network is also down to just 1 hour and 50 minutes, compared to the 45 days validators had to wait in line in June.
Some market participants have noted that the declining waiting times might be a sign of declining demand for staking. Interestingly, the demand for ETH staking was amplified when the Shanghai upgrade went live in April, with institutional investors depositing three times the amount deposited in the previous month.
The Shanghai upgrade enabled the ability for validators to withdraw their staked ETH after more than two years. Although, it is worth noting that at the time of the upgrade, the majority of ETH staked was underwater.
Still, while the demand for staking ETH now appears to have weaned off, the number of active validators has been on the rise. Data shows that there are currently 857,000 active validators on the network, with around 22% of the cryptocurrency’s supply staked.
The counterintuitive numbers might be caused by the increased popularity of liquid staking platforms like Lido and Rocket Pool, which together have $15 billion in Total Value Locked (TVL).