Just 100,000 Addresses Have Enough ETH to Stake

Ethereum is scaling and soon it will be staking with the question in everyone’s mind being just how many eths might be locked for staking, and therefore what might be the returns.

A new data analytics website says that only 118,382 wallets have more than 32 eth, the amount required to solo stake.

They claim this data is derived from EthereumETL, a somewhat cool project that allows you to parse blockchain data into spreadsheet readable form or for databases.

If these circa 100,000 wallets had precisely 32 eth, then many ethereans would be vary happy as it would mean only 3,788,224 eth can stake. Thus the returns would be huge:

Staking returns estimates by Vitalik Buterin
Staking returns estimates by Vitalik Buterin

So at less than 5 million staking eth, you’d get a 10% return, or 3.2 eth a year, which beats even stocks.

However, they do not provide the amount of eth held by these wallets. When we look at that, the picture is quite different:

Top eth holders, June 2020
Top eth holders, June 2020

There appears to have been a very big increase in the eth holdings of exchanges since the last time we looked in June 2018 just as the bear market was beginning with some speed.

Back then the top address had just 1.5 million eth and it probably was an exchange’s cold wallet. The reason probably being that more and more were sitting on fiat.

Now it appears more and more are accumulating and holding, with Bitfinex alone having an astonishing 5 million eth.

So the top 10,000 addresses probably have at least 30 million eth, with the smallest holding among those addresses having fallen a bit to 746 eth from about ◊800 two years ago.

With 30 million eth staked the returns are about 3%. Quite a bit more than what you can get on Compound which gives only 0.01% because there’s too much supply and not enough eth borrowing demand.

That’s presumably because with some risk you can get a one off 50% of your eth holdings in DAI, which you can then margin up and hope you don’t get called to lose it all.

Staking of course is expected to be a lot less risky as you don’t get called based on price, but only if you misbehave.

So 30 million eth is probably a reasonable estimate of how many will stake eventually, but initially it might be far less as people will probably want to see first just how safe it is.

In addition how much will stake probably will depend on what the price does because as shown above how many hold does depend on price action.

Staking thus may become another price indicator. Not least because 32 eth is not necessary for participation as you can join a staking pool or some staking service provided probably by Coinbase and others.

Yet 32 eth is required for solo staking so this number of addresses that have 32 eth or more can be an indication of the level of decentralization.

Ethereum active addresses, June 2020
Ethereum active addresses, June 2020

There are currently more than 530,000 active eth addresses, that being addresses that have engaged in some interaction today, like sending or receiving eth.

That’s at a yearly high, showing increased activity and thus presumably increased demand.

In addition there are some 100 million distinct ethereum addresses. Making these 100,000 addresses just 0.1% that can participate in solo staking.

If price increases then even less will be able to solo stake. Meaning a delicate balance needs to be struck between not wanting too much staking concentrated on exchanges while wanting as much participation in validation as possible.

A balance depending more on price because at $1,000 per eth for example you’d need $32,000 eth to solo stake.

At $10,000, as eth bulls keep being ‘reminded’ this will reach, you’d need to sell a nice house in one of the most expensive cities to be able to just about solo stake.

In bitcoin however solo mining is not realistically possible at all unless you’re putting in tens or even hundreds of millions, with just a handful of pools there running the network.

Yet those pools have no say over exchanges and vice versa. While with staking exchanges will probably also be the handful of staking pools, potentially creating a significant merger during controversial network wide decision makings.

Still you can move from exchanges as a staker and there will be non-exchanges staking pools as well as specialist staking pools and maybe even decentralized staking pools find adoption.

So a balance can potentially be found to both maintain decentralization as well as get returns in eth on your asset holdings.

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