Ethereum Staking Demand Skyrockets Following Network Upgrade

Following several upgrades and a switch in its consensus model, Ethereum is experiencing a surge in validator demand

article-image

Ebru-Omer/Shutterstock, modified by Blockworks

share

Ether (ETH) is witnessing its highest levels of staking activity following a critical update earlier this year.

The network’s transition to Proof-of-Stake (PoS) late last year, coupled with Ethereum’s “Shapella” network upgrade in April, which enabled withdrawals of staked ETH as well as rewards, has led demand for new validators to reach its highest level in two and a half years.

Previously, users could stake their ETH to the Beacon Chain as early as December 2020, but it wasn’t until Shapella was fully implemented that it became possible to withdraw.

As a result, over 1 million ETH was withdrawn shortly after the upgrade, sparking temporary concerns as to whether demand would simply rush to the exit indefinitely and cause the price of ETH to dip.

Yet, this rush has been balanced by an influx of eager validators waiting for activation, indicating a sustained demand for Ethereum staking, an analysis by Coin Metrics shows.

“The entry queue has reached its highest level since the Beacon Chain’s genesis in December 2020, with a total of 64,000 validators eagerly waiting to participate,” Coin Metrics said.

In contrast, there are effectively zero validators wishing to withdraw, that are stuck in the queue. That’s a stark contrast to withdrawal queues just last month, which stood at roughly 17,500.

The surge of new validators has helped drive the active validator count to a new high of nearly 584,000, data shows. This number has more than made up for the transient decrease in complete withdrawals that occurred when withdrawals were initially introduced.

As the number of active validators approaches the 589,000 mark, an internal protocol parameter, known as the Churn Limit, will rise, allowing for the daily activation of an extra 225 validators. 

However, even with this increased pace, individuals or staking pools spinning up new validators to join the queue today would still need just over a month to become active, Coin Metrics noted.

Liquid staking tokens predicted to fuel staking value

A budding narrative in the decentralized finance (DeFi) world underscores the escalating demand for Liquid Staking Tokens (LSTs). 

These tokens, representative of staked assets, bring a new level of liquidity to the traditionally illiquid PoS model by allowing staked assets to participate in DeFi applications while still contributing to the network’s security. 

They provide a bridge between staking and DeFi by offering liquid tokens that represent staked ETH, allowing holders to freely interact with DeFi protocols while still earning staking rewards. 

The growing prominence of LSTs within DeFi is intricately linked to Ethereum’s staking ecosystem. Behind every LST, there is a staking operation, providing the required security and validation for the Ethereum network. 

Some of the established decentralized players are jockeying for market share, such as Lido DAO (LDO), Frax (FXS) and Rocket Pool (RPL), alongside centralized staking providers such as Coinbase, and a slew of others, with new offerings cropping up regularly post-Shapella.

In essence, the explosion of LSTs within DeFi implies a parallel increase in Ethereum staking activity. As the role of LSTs becomes more integral to DeFi’s future, it may inadvertently fuel the demand for ETH, Blockworks was previously told.


Get the news in your inbox. Explore Blockworks newsletters:

Tags

Decoding crypto and the markets. Daily, with Byron Gilliam.

Upcoming Events

Old Billingsgate

Mon - Wed, October 13 - 15, 2025

Blockworks’ Digital Asset Summit (DAS) will feature conversations between the builders, allocators, and legislators who will shape the trajectory of the digital asset ecosystem in the US and abroad.

recent research

Unlocked by Template (10).png

Research

Innovations on Aptos’ technical design through Raptr, Shardines, and Zaptos approach near-optimal latency and throughput by unlocking 100% utilization of network resources, with the capacity to settle 260k transactions per second with latencies less than 800ms. The original Move language was revamped with the launch of Move 2, supporting more expressivity in smart contract logic and a scalable ability to interact with high volume datasets. The ecosystem has benefitted from strong asset inflows, now hosting over $1.3B in stablecoins, $450M in bridged BTC, and $530M in RWAs. Activity in the Aptos ecosystem has grown notably over the past year, with monthly application revenue reaching ~$835k and monthly DEX volumes growing to over $5B, both at new all time highs.

article-image

Interchain Labs will focus on sovereign L1s and institutional demand, abandoning plans for smart contracts on the Cosmos Hub

article-image

Also, only three tokens have outperformed bitcoin so far this year: XMR, HYPE and SKY

article-image

The fund group has submitted proposals in recent months for other funds that would hold litecoin, solana, XRP, HBAR, Sui and others

article-image

Momentum’s back — BTC leads, risk assets follow

article-image

Ondo Finance’s acquisition of blockchain development company Strangelove follows its buy of Oasis Pro

article-image

Cryptocurrency and stock traders alike had a lot to unpack Wednesday