Ethereum staking means users lock their ETH tokens to validate transactions in exchange for rewards paid out in Ether. Therefore, staking is considered passive investing – placing coins in a self-storage or exchange wallet for use. Currently, the on-chain annual staking yields are around 4%.
There have been over 16.5 million Ether, worth $27.7 billion staked since Beacon Chain launched in December 2020, of which 31% or 5.15 million ETH are profitable while the rest, 11,385 million ETH, are not, according to Binance Research.
The loss is mainly due to the current market rate of ETH being lower than the rate when they were locked in the Beacon Chain.
Currently, the market is trying to gauge potential selling pressure following Ethereum’s Shanghai upgrade, scheduled for mid-March. This much-anticipated upgrade is set to open staked ETH withdrawals.
According to Binance Research, the lost ones have little incentive to liquidate their holdings after a successful Shanghai upgrade. Meanwhile, the profitable ones are likely to continue holding.
“We note a sizable amount of ETH (around 2M) was staked at prices in the US$400-$700 range – this represents the earliest stakers in [December] 2020 – a group that is likely illiquid given that liquid staking was far less known at the time,” Binance Research noted in the report published early Thursday.
“While this is a considerable chunk of staked ETH and is currently at profit, given these were the earliest stakers in the market, we can imagine these are some of the strongest Ethereum believers,” Binance Research said.
Notably, it is not possible to withdraw the full amount of staked ETH on the day of the upgrade. Also, only 43,200 ETH can be unstaked per day. However, investors can still withdraw constantly the total staking rewards earned, amounting to about 1 million ETH, according to Saxo Bank.