Ethereum Staking Deposits Dip Due to Regulatory Pressure and Shapella Upgrade

Ethereum Shapella

According to on-chain analytics platform Glassnode, the amount of Ethereum being staked monthly has recently experienced a dip. The reason for this decline can be attributed to two main factors — increased regulatory pressure and the upcoming Shapella upgrade scheduled for April 12.

The US Securities and Exchange Commission (SEC) has been actively targeting cryptocurrencies this year, with a focus on staking. Despite there being no official legislation from Congress classifying ETH as a security, the SEC has taken a strong stance that Ether is indeed a security. 

This regulatory pressure has led to a decline in Ethereum staking deposits.

In addition, The Shapella hard fork, also known as the Shanghai hard fork, is scheduled for April 12. The upgrade will enable the phased release of ETH staked on the Beacon Chain. 

These two factors, the increased regulatory pressure and the upcoming upgrade, have caused the dip in Ethereum staking deposits, according to Glassnode.

Furthermore, major centralized exchanges like Coinbase, Binance, and Kraken have lost market share to the liquid staking platform Lido, which accounts for almost a third of the total amount of ETH staked. This shift can be attributed to the hefty commission fees charged by centralized exchanges, with Coinbase charging even higher commissions for other assets like Cardano and Solana. 

In contrast, Lido takes a 10% commission and offers additional yields on DeFi platforms through its staking token Lido Staked ETH (stETH), making it a more profitable platform for savvy stakers.

Looking ahead, analysts predict that liquid staking platforms such as Lido will get a boost when ETH is released from the Beacon Chain after the Shapella upgrade.