Leading ethereumblockchain development firm ConsenSys has reported a surge in interest from institutional investors in ethereum staking services, according to its analyst Michiel Milanovic.
According to Milanovic, inflows to top institutional ethereum investment providers in April were about three times higher than the previous month. He also mentioned that about 80% of the capital inflows occurred after the Shanghai Stock Exchange upgrade on April 12. Since then, approximately 18 million ETH worth $35 billion, previously locked in staking contracts, have been available for withdrawal.
Allowing withdrawals also reduces the liquidity risk associated with staking locked ETH, which has previously deterred some investors.
Milanovic added that they expect a natural increase in the staking rate after the first reduction of ETH by long-term validators. This reduction is expected to occur in the coming months as Ethereum moves to a proof-of-stake consensus mechanism.
The Shanghai upgrade, also known as the Berlin hard fork, is the first of a planned upgrade of the ethereum network in 2021. Designed to improve network efficiency, reduce gas fees and enhance smart contract compatibility. The smooth completion of this upgrade has been welcomed by the Ethereum community and paves the way for future upgrades, including the highly anticipated London upgrade, scheduled for July.
The surge in interest from institutional investors in Ethereum staking services reflects growing awareness of Ethereum’s potential as a store of value and its growing use in decentralized finance (DeFi) applications.
In recent years, Ethereum has emerged as the leading blockchain platform for DeFi, enabling decentralized lending and trading of cryptocurrencies without intermediaries.
The total value locked (TVL) in DeFi applications has soared to $60 billion, with Ethereum accounting for the majority.