The Impact of Restaking Protocols on Ethereum’s Role as a Monetary Asset: Glassnode Analysis

The latest trend towards restaking protocols in the Ethereum ecosystem has analysts questioning the impact on ETH’s role as a monetary asset. Glassnode’s examination revealed that the emergence of EigenLayer and LRT staking protocols has increased ETH’s share of staking to 26% of the total supply, with a total of 31.4 million Ethereum staked as of April 13.

While more ETH being staked reduces non-validator rewards, Glassnode suggests that the total amount of rewards paid could still contribute to inflation if there are a significant number of locked assets. After The Merge, the share of new coins in the total Ethereum supply reached 1.01%, with about 3.55% of ETH withdrawn from circulation.

The increase in staking has led to a drop in the remuneration level for ensuring network security per each validator to 3.2% per annum. Innovations like MEV, liquid staking, restaking, and liquid restaking have also increased staking needs beyond the original intent, with liquid restaking protocols accounting for 27% of the coins sent to the deposit contract.

As more ETH is staked, the effects of inflation begin to affect fewer holders of the asset, leading to a transfer of wealth to participants generating additional income from network security. Experts warn that over time, the real yield component could make ownership of ETH less attractive, potentially negating its function as a monetary asset in the Ethereum ecosystem.

The restaking sector has been actively growing since the beginning of the year, with the total value locked in restaking protocols exceeding $8 billion in early April. The leader in this sector was the ether.fi project with $3.2 billion locked. Stay updated on the latest developments in the Ethereum ecosystem by following us on Google News.