In September 2022, Ethereum (ETH) renamed its consensus mechanism from Proof of Work (PoW) to proof of stake (PoS). This was also called the ‘merge’ and this refers to the merging of the traditional Ethereum blockchain and the Beacon chain, so that the Beacon Chain takes over. This marks the end of PoW and complete transition to PoS.
Nearly four months after the Merge, the Ethereum network has hit a major milestone. Data from Etherscan shows that at the moment more than 16 million ETH has been deposited in Ethereum’s Beacon Chain contract staking contract.
How does strike work?
Staking means that investors lock PoS cryptocurrencies in a certain contract or simply on a crypto exchange in order to contribute to the network. Within the PoS protocol, block production and validation are done by strikers who are also known as validators are called.
The moment you, as a validator, do something that goes against the rules, such as validating incorrect transactions, you can often lose your stake. In return, a validator receives a reward when he/she adds a new block to the blockchain.
The 16 million ETH currently being staked equals 13.28% of the total supplies and has a total value of almost $22.38 billion at the current ethereum price. The ETH currently being staked is stuck and could not be moved until the next Shanghai update is rolled out. Earlier you could read in the Ethereum news that the developers have set the month of March for this next major update.
While the growing amount of ETH being staked can be interpreted as a promising sign for Ethereum’s safety and adoption, it will also undoubtedly put pressure on the network’s core developers to allow withdrawals.
Lido, Coinbase, Kraken, and Binance, the four largest Ethereum validators, collectively account for 55.88% of all ETH staked, according to Nansen data. This raises questions about the degree of decentralization of Ethereum.