The Ethereum 2.0 staking contract has become the largest holder of the cryptocurrency ether.
According to the blockchain explorer website Etherscan, the top account by balance is Ethereum 2.0 with 6.9 million ETH ($21.3 billion worth). Wrapped ether (WETH) comes in second, holding 6.7 million ETH ($20.6 billion).
“The fact of the deposit contract overtaking the wrapped ether contract as No. 1 doesn’t really mean anything in itself,” said Ben Edgington, lead product owner at ConsenSys. “It just shows that staking on Eth 2.0 is incredibly popular.”
This shows growing confidence the Ethereum Foundation is going to successfully complete the transition to Ethereum 2.0, said Tim Ogilvie, CEO of Staked, a firm that helps investors stake digital assets on Ethereum as well as on other blockchains including Cardano, Polkadot and Solana.
Wrapped ether is an ERC-20 compatible version of ether, allowing the token to be used in decentralized applications within the Ethereum ecosystem, according to Messari, a cryptocurrency data and analysis firm.
The Ethereum 2.0 contract “is meant to move value into the Beacon Chain in order to secure it as a base layer on proof-of-stake, and then generate an interest rate on top algorithmically,” said Lex Sokolin, head economist at ConsenSys. The Beacon Chain will introduce proof-of-stake to Ethereum. The chain’s role will change over time but is considered a foundational component for the security, sustainability and scalability towards which Ethereum is working.
“That capital is currently a one-way street until more bridges are built, tech matures or through derivative liquidity,” he added.
At press time, ether was trading at $3,082, based on CoinDesk 20 data.
“The 32 ETH deposit minimum for Eth 2.0 presents a barrier to stakers who have less than 32 ETH or prefer to hold liquid assets,” Nansen, a blockchain analytics firm, wrote in a report emailed to CoinDesk on Aug. 17. In order to become a full validator, users need to deposit a minimum of 32 ETH.
Therefore, some users might prefer to stake ETH through an exchange such as Binance or Kraken, or in liquid staking protocols like Lido or Ankr.
The report said that while Kraken and Binance continue to account for a significant proportion of the Ethereum 2.0 stake, they are losing share to alternative staking solutions like Lido, which is a decentralized staking pool.
In terms of tracked entities across multiple wallets, Kraken is the biggest depositor.
“The rise of Lido marks a vast improvement in the distribution of network control. On 1st March 2021, Kraken (14%), Staked.us (8.2%), Binance (12.9%) collectively controlled over 34% of total stake,” according to the Nansen report.