Ethereum 2.0 stakers face a 36.5% larger loss than ETH spot investors — report
Ethereum investors who staked millions of dollars worth of Ether (ETH) tokens to become validators on its soon-to-launch proof-of-stake (PoS) network are now facing heavy paper losses.
In detail, investors have locked a little over 13 million ETH into the so-called Ethereum 2.0 smart contract since it went live in December 2020. However, there is no date when these investors can redeem their tokens alongside the 10% yield.
Interestingly, around 62% of Ether tokens were deposited before the price peaked at around $4,930 in November 2021. Meanwhile, the other 38% were deposited after the record high, according to Glassnode's latest report.
As a result, the total value locked inside the Ethereum 2.0 smart contract peaked at $39.7 billion in November 2021, led by 263,918 network validators. But now, the value has dropped to $14.85 billion as of July 7, despite an additional inflow of 5 million ETH in the last eight months.
Ethereum 2.0 stakers deposited ETH to the network's PoS contract at an average price of $2,390. So, ETH stakers are now holding an average loss of 55% as a result of ETH's 75% crash since November 2021, Glassnode noted.
Excerpts from its report:
Ether's bear market has also affected Ethereum 2.0 contract inflows.
Notably, the weekly average of 32 ETH deposits into the Ethereum 2.0 contract has fallen to 122 a day compared to 500 to 1,000 per day in 2021. This suggest investors' reluctance to lock their ETH holdings away amid a bear market.
From a technical perspective, investors' fears seem to be legitimate.
Ether risks undergoing a major breakdown in Q3/2022 since it has been painting a classic continuation pattern called the ascending triangle, as illustrated in the chart below. Therefore, ETH's price could
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