Ethereum has crossed a symbolic threshold, with more than half of total ether (ETH) now issued in its proof-of-stake (PoS) contract for the first time in the network’s 11-year history, Santiment said in a post on X that has been met with criticism.
The on-chain analytics firm said Tuesday that 50.18% of all historically issued ETH is now held in the staking deposit contract. The figure reflects the cumulative ETH that has entered the contract since staking was introduced ahead of the proof-of-work network’s transition to PoS in 2022.
According to data from CoinDesk, the total supply of ether is 120.69 million tokens. Bitmine, the world’s largest ether-focused treasury firm, holds 4.29 million ETH, of which 2.9 million are staked. According to Arkham data, the largest holder is the Eth2 Beacon deposit contract with 77.1 million or more than 60% of the total supply. It is the one that has the most value because it serves as a central and mandatory gateway to staking and securing the blockchain. Beacon is followed by Binance with 4.1 million ETH, BlackRock with 3.4 million and Coinbase with 2.9 million.
As long as the tokens are staked, they cannot be transferred or traded. Withdrawals have been enabled since the Shanghai Update in 2023, allowing validators to exit and return ETH to circulation.
That distinction led some analysts to warn against interpreting the 50% figure as a permanent block to supply.
“Inaccurate and materially misleading”
“The post is inaccurate, or at least materially misleading,” Luke Nolan, senior research associate at CoinShares, told CoinDesk. “It refers to the one-way deposit contract used to stake ETH, but does not take withdrawals into account. While ETH is sent to that contract when validators stake, it is not a permanent sink.”
Since withdrawals have been enabled, ETH can leave the validation pool and re-enter circulation, meaning that looking solely at the deposit contract balance may overstate the amount actually staked, Nolan said.
“There is also an important nuance around the figures cited,” he added. “It is not correct to suggest that there are currently more than 80 million ETH staked. Historically, approximately 80 million ETH have passed through the staking contract, but the amount actively staked today is closer to 37 million ETH, which is around 30% of the current circulating supply. That distinction materially changes the narrative.”
Aleksandr Vat, BizDev at Ethplorer.io, agreed with Nolan and provided CoinDesk with supporting data reinforcing that distinction.
The Beacon deposit contract balance on the Etherscan tracker, currently around 80.97 million ETH, reflects deposits accumulated since launch and does not decrease when validators exit. Withdrawals are processed by minting ETH into execution layer addresses rather than subtracting them from the deposit contract itself, Vat said.
Based on active staking metrics, approximately 37,253,430 ETH have currently been staked, according to data from Ethplorer and CryptoQuant, implying that staking represents 30.8% of the total supply.
Santiment’s 50% figure appears to compare the accumulated balance of the Beacon contract to the historically issued supply before the EIP-1559 burns, Vat said. While this may be mathematically consistent depending on the denominator used, it does not represent the amount of ETH currently locked or withdrawn from circulation, he noted.
Ethereum matures into a ‘digital bond’
Still, the milestone highlights how central staking has become to Ethereum’s economic design, Vineet Budki, partner and CEO at Sigma Capital, told CoinDesk. As participation increases, a greater proportion of ETH earns yield through validation rewards, reinforcing its positioning as a yield-generating crypto asset, he said, adding that he sees the development as evidence of Ethereum’s maturation into what he called a “digital bond.”
“Ethereum’s milestone of 50% staked supply marks its evolution into a digital bond, where network security is fueled by long-term convictions rather than short-term speculation,” Budki said. “By locking half of the total issuance in a one-way vault, the protocol has caused a structural supply crisis.”
Budki also noted the acceleration of network activity, including a 125% year-over-year increase in daily transactions, a doubling of daily active addresses, and a surge in real-world tokenized assets, much of which occurs on Layer 2 networks that sit on Ethereum’s base layer.
Nolan noted, however, that the recent growth in validators has been concentrated among large players.
“A significant portion of recent validator inflows have been driven by large entities such as Bitmine and US-listed ETFs, which have taken up a notable portion of the inflow queue,” he noted.
As staking levels continue to rise, the debate shows how Ethereum supply metrics and how they are presented can significantly shape market narratives, Budki concluded.
