Last Friday, the deposit contract for staking Ethereum (ETH) on the Beacon Chain reached over 10% of the entire supply, containing over 12 million in Ethereum. Formerly known as ETH 2.0, the deposit contract for Ethereum’s consensus layer now has ETH worth over $34 billion dollars at current prices.
The Beacon Chain is a concurrently-running proof-of-stake (PoS) version of Ethereum in which the mainnet is set to merge in the future.
The Beacon Chain is the first major step in Ethereum’s transition from a proof-of-work (PoW) to a proof-of-stake (PoS) consensus model. A trader must invest a minimum of 32 ETH to become a validator in ETH 2.0. Hence, the largest Beacon Chain contract, valued at $34 billion, highlights the enormous demand and trust in the future ETH 2.0, despite several delays over the past year.
ETH developers started the community testing of the proof-of-stake network in December, however, the tentative merger date of June 2022 has yet again been postponed, without any certain date for the merger being offered, but rather
Ethereum’s biggest upgrade since its inception has faced numerous challenges and continuous delays along the way. Despite that, the deposit contract has grown significantly with over 2 million ETH deposited over the last two months.
The deposit contract currently yields an estimated 4.5% yearly return, though, once locked, funds will not be fully releasable until the Shanghai upgrade that is currently slated for later this year.
Trent Van Epps of the Ethereum Foundation has emphasised that not only should the Merge make the chain more secure, but it also is estimated to reduce the Ethereum network’s energy use by up to 99.95%. Moreover, the Merge could reduce annual issuance of Ethereum to net 0%, down from the current net 3-5%.
In addition to the more than 12 million ETH now locked in the deposit contract for the Beacon Chain, approximately 2.18 million ETH have been destroyed since Ethereum Improvement Proposal-1559 was launched in the London Hardfork last August. That upgrade sought to stabilise network transaction fees and introduced a base fee Ethereum burn.
