Ethereum (ETH) has been in the spotlight lately, especially during the first week of May, due to a sharp increase in staking rewards.
According to data from Beaconcha.in, Ethereum validators earned a total of 24,997 ETH ($46 million) in just one week, a 40% increase from the previous week. This sudden increase in staking rewards can be attributed to the memecoin boom, which caused a dramatic increase in transaction fees on the Ethereum network.
Staking rewards are the income earned by validators for building and validating new blocks in the consensus layer of the blockchain. Validators receive a portion of transaction fees and staking rewards per block. The amount of staking rewards depends on the total amount of ETH staked. The recent spike in rewards is due to a significant increase in validator fee income, thanks to the explosive gas prices brought on by the memecoin craze.
The popularity of the PEPE token, a green frog-themed meme coin, has contributed significantly to the increase in gas fees on the Ethereum network. Decentralized exchange UniSwap processed over 400,000 transactions involving PEPE tokens, increasing on-chain activity and subsequently transaction fees.
Ethereum’s average gas fee exceeds 100 Gwei, the highest level since May 2022, generating more revenue for validators.
Following the September 2022 Merge update, the Ethereum network recently completed its transition to a Proof-of-Stake (PoS) consensus mechanism. This transition was completed with the Shanghai upgrade on April 13 of this year, allowing the submission of ETH withdrawal verification for the first time. With the completion of these major updates, investors who were initially wary of liquidity risk and uncertainty found new opportunities to start staking ETH.
Currently, Ethereum has 620,473 validators, a 9% increase from 567,000 in the Shanghai update. The amount of ETH staked on the network is 16,353,927, or about $29.5 billion. To become a validator, 32 ETH needs to be locked into the network.
All in all, the soaring ETH staking reward rate is a positive development for validators on the Ethereum network. This trend is likely to continue, especially as gas prices rise due to the growing popularity of cryptocurrencies and the memecoin craze.
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according to Kyptos