Glassnode analyzed the impact of the growing trend towards restaking protocols on Ethereum’s role as a monetary asset. The emergence of EigenLayer and LRT staking protocols has increased ETH’s share of staking to 26% of the total supply, with a total of 31.4 million Ethereum staked as of April 13.

Despite the reduction in non-validator rewards with more ETH being staked, Glassnode suggests that the total rewards paid could still contribute to inflation if a significant number of assets are locked. Post The Merge, the share of new coins in the total Ethereum supply reached 1.01%, with approximately 3.55% of ETH withdrawn from circulation.

As a result of the metric increase, the remuneration level for ensuring network security per each validator dropped to 3.2% per annum. Innovations like MEV, liquid staking, restaking, and liquid restaking have increased staking needs beyond the original intent, accounting for 27% of the coins sent to the deposit contract.

With more ETH being staked, inflation begins to affect fewer holders of the asset, resulting in a transfer of wealth to participants generating additional income from network security maintenance. Experts warn that over time, the real yield component could make ownership of ETH less attractive, potentially negating Ethereum’s function as a monetary asset in the ecosystem.

Restaking enables users to stake their assets multiple times on the main blockchain and additional protocols, with the restaking sector experiencing significant growth since the beginning of the year. By early April, the total value locked in restaking protocols surpassed $8 billion, with ether.fi leading the way with $3.2 billion.

Post Views: 5