The Ethereum ecosystem is seeing various positive effects after Ethereum hit a new all-time high of $ 1,575 on February 3rd.
During this time, Ethereum overtook the Avalanche Network to become the third largest staking token in the crypto industry. With 2.15 percent of the total supply, Ethereum has included over 3.7 billion dollars in its ETH 2.0 deposit address.
Ethereum is falling behind Cardano and Polkadot, which stake $ 9.3 billion and $ 10.9 billion, respectively. However, their staking percentages are much higher in relation to the total supply.
ETH 2.0 has got off to a sensational start
Ethereum began its transition from version 1.0 to ETH 2.0 at the end of 2020. It moved away from a Proof-of-Work (PoW) validation method towards a Proof-of-Stake (PoS) protocol. By using PoS, Ethereum can theoretically conduct faster transactions on the network at a lower price.
The network opted for a simpler method by switching from technical and energy-intensive PoW mining to PoS staking. With staking, users validate transactions by using their stakes as collateral.
This rewards users for acting truthfully and nodes that attempt to fool the network are penalized by reducing their original staking.
Ethereums Beacon Chain
This model is a general improvement on verification that provides additional security to the network and increases the revenue from verification.
Since the introduction of the ETH 2.0 staking contract, users from all over the world have deposited almost 3 million ETH.
The catalyst for decentralized finance
Decentralized finance, commonly known as DeFi, is one reason the Ethereum network has exploded in popularity over the past year. DeFi enables everyday users to conduct financial transactions without the need for a third party.
This enables users to extract the full value of their transaction without being taken advantage of by the platform operator. The total value included in DeFi rose from less than $ 1 billion in early 2019 to nearly $ 30 billion today.
Since the majority of DeFi applications are based on Ethereum, it is not surprising that ETH was able to establish itself as the third largest staking token.
Even if it only has a fraction of the total token supply compared to its closest competitors, it is by far the largest network. As DeFi continues to establish itself as a pillar of the blockchain, more users will likely be open to using their Ethereum (For instructions on how to buy Ethereum from eToro ) for staking.