A growing number of Ethereum supporters remain optimistic about the network's potential, as evidenced by recent data from Nansen. Over the last day, the gross staking deposits have reached an impressive $198.7 million, or 94,800 ETH.
Staking has gained prominence in the Ethereum community due to the recent Shanghai upgrade that took place on Wednesday. This update enabled users who had their ETH locked up for as long as two years to finally access their funds. Staking is a process where users commit their cryptocurrency to the network, ensuring its smooth operation. Ethereum now relies on staking due to its transition to a proof-of-stake blockchain, which employs validators rather than miners to secure the network. Staking participants can earn rewards in the form of digital currency. Ethereum completed its much-awaited transition to proof of stake last year, known as the merge.
Despite the uptick in staking deposits, the latest data reveals that ETH deposits are still in negative territory, signifying that more entities are withdrawing than staking assets. Nansen analyst Martin Lee explained to Decrypt that this outcome was expected, as it's just the beginning. Validators who have accumulated excess ETH from earnings may wish to unstake, as they can only receive rewards on 32 ETH.
Validators have two options when departing the network: a "partial exit" or a "full exit." A partial exit involves validators taking out their accrued rewards while maintaining their 32 ETH stake on the network. A full exit, on the other hand, entails withdrawing both their rewards and initial 32 ETH deposit before leaving the network entirely.
Intriguingly, there was a brief period yesterday when deposits significantly outnumbered withdrawals, with 27,000 ETH deposited compared to only 7,615 ETH withdrawn. Lee noted that the top deposits have come from a few entities, including Lido, OKX, Kiln.fi, Frax, and most notably, a wallet labeled "P2p ETH2 Depositor," which deposited 50,000 ETH.
As for the decreasing withdrawal trend, Lee suggests that the network will soon reach a "baseline" once the initial wave of validators can claim their accumulated rewards. He further explained to Decrypt that a surge in withdrawals at the start is expected, as even validators who wish to continue staking would want to withdraw their accrued earnings and restake them.
At the time of writing, more than 874,000 ETH are awaiting exit from the network. However, current trends indicate that a portion of this ETH will likely be reinvested into the network in the near future.