Analysis of Staking Situation After Ethereum Shanghai Upgrade

Since Ethereum completed the Shanghai upgrade and opened staking withdrawals on April 12, half a month has passed. Although the market was once concerned that opening withdrawals could lead to massive selling pressure, this situation did not occur. As of April 26, despite the total amount of staking withdrawals exceeding 1.7 million ETH, the price of ETH has remained on an upward trend, exceeding $2100 for several days, reaching a new high in nearly 10 months. Meanwhile, the total value locked in DeFi on Ethereum has remained stable, with LSD and LSDFi protocols continuing to be active.

However, this situation has also raised new concerns, with some arguing that the high stake rates of Ethereum may crowd out other on-chain activities, which is not beneficial for long-term development. To better understand the impact of Ethereum's stake rates, we analyzed the current state of Ethereum staking and withdrawals as of April 26, as well as the main application markets for stake rates and staking certificates provided by various staking institutions/protocols, and reached the following conclusions:

1. After the upgrade, the total amount of Ethereum stake withdrawals is approximately 1,724,200 ETH, with full withdrawals accounting for 44.23% and partial withdrawals accounting for 55.77%. The current total amount available for withdrawal is approximately 635,800 ETH, with a certain trading platform accounting for about 30.20%.

2. Full withdrawals occur approximately once every 5 days with a larger scale of withdrawals; some withdrawals are larger during the first 5 days (from the 12th to the 16th), after which it significantly decreases.

3. The withdrawal structure is an important window to observe staking activities and market trends. Partial withdrawals are considered passive withdrawals, while full withdrawals are regarded as active withdrawals. The current withdrawal structure indicates that most institutions/protocols are primarily engaging in passive withdrawals, and the expectations for staking remain relatively stable. Passive withdrawals are also more likely to flow back, which could be a reason for the stable increase in the amount staked and the price of the coins.

4. After the upgrade, the total accumulated stake increased by 387,200 Ether, with a growth rate of approximately 2.13%, equivalent to an average daily growth rate of about 0.15%, slightly higher than the average daily growth rate of 0.13% in the year prior to the upgrade. Overall, staking activities have become more active.

5. The average expected annual staking yield of 18 staking institutions/protocols is approximately 5.45%, higher than the "benchmark rate" of 4.27%. By category, the average expected annual staking yield of LSD protocols is the highest, at approximately 6.17%.

6. LSDFi may threaten the negative feedback loop built into Ethereum staking. When circular staking becomes a higher-yield use case, the increase in the amount staked no longer leads to a decrease in staking rewards, which could have profound implications for Ethereum's economic logic.

Stake Withdrawal Situation Analysis

During the 15 days from April 12 to April 26, the total amount of Ethereum staking withdrawals was approximately 1.7242 million ETH, with full withdrawals accounting for about 44.23% and partial withdrawals accounting for about 55.77%. In terms of the withdrawal cycle, partial withdrawals were larger in the first 5 days (from the 12th to the 16th), and then significantly decreased. Full withdrawals occurred at a larger scale about every 5 days, such as on the 15th, 20th, and 24th, with each of these three days having full withdrawals exceeding 160,000 ETH.

From the withdrawal situation of various institutions/protocols, a certain trading platform has withdrawn 598,800 ETH due to regulatory requirements, making it the highest withdrawal amount among all institutions/protocols. Following that, two large institutions also had total withdrawals exceeding 230,000 ETH. In addition, several other institutions had total withdrawals exceeding 10,000 ETH. Most institutions mainly made partial withdrawals, and a certain LSD protocol only had partial withdrawals.

Currently, the total amount withdrawable from various institutions/protocols and major token addresses is approximately 635,800 ETH. Among them, the total withdrawable amount from a certain trading platform is about 192,000 ETH, accounting for approximately 30.20%. Another large trading platform also has a high withdrawable total, around 96,300 ETH, accounting for about 15.10%.

Stake Total Amount Change Analysis

After the Ethereum upgrade, the total amount staked increased from 18.1659 million ETH to 18.5531 million ETH, a total increase of 387,200 ETH, with a growth rate of approximately 2.13%. The average daily increase is about 0.15%, slightly higher than the average daily increase of 0.13% in the year prior to the upgrade, indicating that staking activities have generally become more active after the upgrade.

From the daily month-on-month changes, the staking amount of Ethereum tends to stabilize, with a decreasing trend in the daily month-on-month change amplitude. Only on the 15th, 20th, and 24th did the cumulative staking amount show a negative daily month-on-month change, corresponding to the peak withdrawal period.

Specifically regarding the changes in the staking amounts of various institutions/protocols, after the upgrade, a certain LSD protocol attracted the most staking amount, approximately 207,400 Ether. Following that are two Staking Pools, which attracted 122,800 Ether and 92,700 Ether, respectively. Among exchanges, two platforms attracted staking amounts of around 40,000 Ether.

Considering the changes in the net flow of staked amounts (staked amount - total withdrawals), apart from one trading platform, another large trading platform is the institution with the largest net outflow after the upgrade, with a net outflow of approximately 198,200 ETH. A certain LSD protocol and a certain trading platform also have significant net outflows. Meanwhile, several Staking Pools and LSD protocols have large net inflows, all above 20,000 ETH.

Stake Yield Analysis

Currently, the expected annualized staking yield of Ethereum is about 4.27%, and the expected annualized staking yield after adjusting for returns is about 3.86%. Over time (with the increase in staking amount), the expected annualized staking yield shows an exponential decline.

In comparison, the staking products offered to users by various staking institutions/protocols have interest rates higher than the aforementioned "benchmark rate". The average expected annualized staking yield of the 18 staking institutions/protocols within the statistical scope is approximately 5.45%. By category, the average expected annualized staking yield of LSD protocols is the highest, at about 6.17%. Next is StakingPool, at about 5.81%. The average expected annualized staking yield of exchanges is the lowest, at around 4.63%.

Among them, the staking yield of a certain trading platform is the highest because it offers additional marketing activity rewards. In addition, there are several other institutions/protocols with yields exceeding 7%, and the excess yield may come from MEV.

It is worth noting the LSD protocol and its derivative LSDFi. These protocols solve the liquidity problem of staked ETH by issuing staking certificates, and now these staking certificates provide users with higher yield possibilities through DeFi "Lego". For example, in a certain LSD protocol with the highest staking amount, 25.77% of the issued staking certificates have been wrapped into a new form, the main wallet addresses of which include multiple DeFi protocols and Layer 2 network gateways, allowing users to participate in a wide range of DeFi activities through these certificates.

Another "Lego" worth paying attention to is re-staking, such as EigenLayer, Aura, Pendle, etc. These LSDFi integrate the liquidity of LSDs, providing users with ultra-high yield mining pools or collateral lending stablecoins. However, these protocols also threaten the built-in negative feedback loop of Ethereum staking. When circular staking becomes a higher-yield use case, the growth in staking amounts no longer leads to a decrease in staking rewards, which resets Ethereum's economic logic and may have more far-reaching consequences than the liquidity crisis transmitted to Ethereum after the "mining difficulty".