Ethereum’s staking landscape has undergone a significant transformation, with queues for validators now effectively at zero. This development marks a substantial shift in how the network accommodates new validators and processes exits, now happening almost in real-time.
This current state signifies a fading rush to lock up ETH, indicating that staking is entering a more steady and stable phase rather than a reactive scarcity-driven frenzy. The absence of lengthy staking queues highlights Ethereum’s improved efficiency, acting as a clear sentiment and liquidity gauge for the network.
In essence, these queues represent the duration for starting or stopping staking on Ethereum. The diminished queues are inherently a feature of the network’s capability to manage staking activity without locking liquidity for extended periods. However, this smoothness comes with its implications: staking rewards have lessened to around 3% as the total amount of staked ETH has outpaced both issuance and fee income. As a result, the incentives for renewed surges of staking or un-staking activity are limited.
The lower yield can indicate crowding within the staking ecosystem, but it simultaneously implies a higher “trust premium.” This means more ETH is being allocated to staking instead of circulating on exchanges, reflecting a strong belief in the network’s long-term stability.
Consequently, the narrative around “staking pressure” is shifting. When queues proliferate, ETH is effectively being locked at a pace that exceeds the network’s capacity to onboard new validators, fostering a sense of scarcity. Conversely, with queues nearing zero, the system achieves a more neutral stance. Stakeholders can now stake or unstake without the delays that previously characterized the process, making staking a liquid, flexible allocation rather than a one-way commitment.
This brings a psychological shift to how ETH is perceived. While staking continues to alleviate immediate selling pressure, it no longer feels like a forced lockdown of assets. Withdrawals proceed smoothly, transforming ETH into a yield-bearing asset whose size can be adjusted based on market sentiment.
Presently, approximately 30% of Ethereum’s supply is staked, falling short of Galaxy Digital’s forecast of 50% by the end of 2025. They anticipated that staking would create a supply shock powerful enough to sustain ETH prices above $5,500, complemented by expectations that Layer-2 solutions would eclipse Layer-1 in economic activity. However, those predictions did not materialize as anticipated.
ETH All-Time Highs Could Be A While Away
Ethereum’s Total Value Locked (TVL) in decentralized finance (DeFi) stands at around $74 billion, significantly lower than its peak of roughly $106 billion in 2021. Despite nearly doubling the number of daily active addresses, the network still captures close to 58% of the total DeFi TVL, a share that conceals a more fragmented ecosystem.
Incremental growth in the market is increasingly being siphoned off by fast-emerging ecosystems like Solana, Base, and even Bitcoin-native DeFi platforms. This expansion occurs within the Ethereum orbit but does not directly translate into commensurate value or demand for ETH itself.
This fragmentation is critical because Ethereum’s former strongholds were founded on simple principles: higher usage led to increased fees, more burns, and heightened supply constraints. The substantial TVL peak in 2021 was also indicative of a leveraged environment; a lower TVL today may not signify reduced usage but instead reflect less speculative behavior.
In the current environment, a significant portion of user activity can occur on Layer-2 networks where transactions are cheaper and smoother. However, this can obscure the value capture that should revert back to ETH, presenting challenges for the asset in market perception.
DNTV Research’s founder, Bradley Park, articulated this sentiment by stating, “Ethereum has lost directional clarity.” He noted that if ETH is primarily seen as a trust asset for staking instead of being actively utilized, it undermines the burn mechanism, resulting in less ETH being burned, ongoing issuance, and cumulative sell-side pressure over time.
Moreover, recent analytics indicate that Base has generated more fees over the past month than Ethereum itself, igniting questions about whether Ethereum’s trajectory now sufficiently channels usage back into value for ETH.
This disconnect between user activity and value capture is manifesting on prediction platforms like Polymarket, where traders assign only an 11% chance that ETH will reach a new all-time high by March 2026. This outlook persists despite rising active addresses and a dominant share in DeFi TVL, indicating that the market perceives fragmentation and unconstrained staking supply as limiting factors.
However, an evolvement in U.S. policy that permits yield-bearing ETH products could quickly alter this landscape, reopening the “staking premium” narrative and influencing the future path of ETH.
