When ETH Deepens Its Balance Sheet: The Historical Positioning of Staking's Next Phase and Its Future Direction?

The staking rate has reached a historical high, with a significant queue of ETH, redefining the boundaries of ETH's yield, liquidity, and risk.

Currently, if you want to become an Ethereum validator directly, you have to wait in line for over a month.

As of July 22, there are still about 2.5 million ETH in the Ethereum staking queue, with an expected wait time of over 43 days. In contrast, the wait time for exiting the queue is only a few minutes, almost negligible.

From the numbers alone, it is clear that an increasing amount of ETH staking is siphoning off market liquidity.

However, more noteworthy than the growth in staking scale is that the queue has begun to turn into an issue of capital efficiency. After all, for ETH treasury companies and institutions choosing the native staking path, a wait of over 40 days means a significant amount of assets temporarily cannot generate staking rewards, necessitating a recalculation of asset allocation, liquidity arrangements, and opportunity costs.

Ultimately, as ETH becomes more deeply integrated into balance sheets, the issues facing staking are no longer just about "how to get more people involved," but rather evolve into a more traditional and complex set of asset management problems.

1. With a Record High Staking Rate, How Should We Understand the Queue?

The current high staking rate of Ethereum did not form suddenly at a single point in time.

In 2023, the Shapella (Shanghai + Capella) upgrade opened the staking withdrawal feature, allowing validators to reclaim their staked principal and rewards at the protocol level, creating a relatively complete closed loop for ETH staking's entry, operation, and exit. Subsequently, the derivatives market based on LSD rapidly expanded, pushing the ETH staking rate higher.

As of the time of writing, the amount of ETH staked has surpassed 40 million, valued at approximately $14 billion at current prices, accounting for over 33% of the total supply, a significant increase from about 10% a few years ago, reaching a historical high.

In other words, currently, more than 1 out of every 3 ETH is participating in staking.

Against the backdrop of a record high staking rate, the persistently high entry queue reveals a new problem.

As is well known, the entry and exit queues for Ethereum essentially serve as a speed limit mechanism to protect consensus stability. New ETH cannot enter the validator set indefinitely at the same time, and exits cannot occur in a concentrated manner in a short time. The protocol sets the number of ETH that can be processed per Epoch based on the current number of validators. When the funds applying to enter or exit exceed the processing capacity, a queue forms.

From this perspective, the 2.5 million ETH queued for entry first indicates that the market demand for staking capacity far exceeds the current speed at which the protocol can release it—this may include new long-term funds entering, treasury companies deploying existing holdings, staking service providers adjusting validator structures, and institutions transferring ETH from custodial accounts into the staking system.

Thus, this actually sends a clear signal: at least at this stage, the funds willing to let ETH enter the staking system far exceed those actively withdrawing from the validator set.

This marks a significant departure from the staking logic at the initial launch of the Beacon Chain.

Early ETH staking was more akin to a network participation mechanism aimed at technical users, independent validators, and long-term supporters of Ethereum, where participants run nodes, maintain the network, and bear technical risks in exchange for protocol rewards.

With the rise of liquid staking, it has gradually become a product for ordinary token holders to earn on-chain yields. For example, exchange staking, staking-as-a-service, and staking pools have lowered the technical barriers, while liquid staking protocols like Lido and Rocket Pool have further enhanced the availability of staked funds, allowing users to receive liquid staking tokens like stETH and rETH after staking ETH, which can not only be transferred and traded but also enter lending, liquidity pools, and other DeFi protocols.

Now, as a large amount of ETH enters corporate treasuries, fund products, and professional custodial systems, staking is undoubtedly moving into its third phase, shifting from "who can participate in staking" to "how large amounts of ETH should be managed."

Of course, the institutionalization mentioned here does not mean that early staking was entirely dominated by retail investors, nor does it imply that institutions will replace ordinary users. More accurately, the focus of market discussions is shifting:

In the past, the focus was on how ordinary users could earn staking rewards; now, it is shifting to how staking can become a standardized financial management capability once hundreds of thousands or even millions of ETH enter corporate balance sheets.

2. Structural Changes Behind Institutions Like BitMine

The emergence of ETH treasury companies is making this change more apparent.

The core logic of Bitcoin treasury companies is to continuously accumulate BTC through financing and capital market operations, increasing the number of bitcoins corresponding to each share; however, for ETH treasury companies, holding assets is not the endpoint of their strategy.

After all, BTC itself does not have protocol-native staking rewards. If holders want to obtain additional returns, they typically need to introduce lending, custody, derivatives, or other counterparty risks, while ETH can directly participate in Ethereum consensus and earn protocol rewards without selling assets.

This gives ETH treasuries a natural layer of operational space, meaning that in addition to deciding how much ETH to buy, they also need to decide how these ETH will be deployed.

The actions of BitMine are a concentrated reflection of this institutional language.

According to its latest disclosed data, as of July 19, BitMine holds a total of 5,777,468 ETH, accounting for approximately 4.8% of the total ETH supply, of which 4.917 million ETH are staked, accounting for 85% of its total ETH holdings, valued at approximately $9.2 billion.

Based on the ETH price at that time and BitMine's own 2.67% seven-day annualized staking yield, the company expects to earn approximately $247 million in staking income annually; if all its ETH is ultimately staked, the expected annual rewards could reach about $290 million.

What is even more noteworthy is the speed of this numerical change.

In early February of this year, BitMine had about 2.8975 million ETH participating in staking, accounting for about 67% of its holdings; by mid-July, its staking scale had increased to approximately 4.9172 million ETH. This means that in less than half a year, BitMine has deployed over 2 million ETH, with the staking coverage rate increasing from about two-thirds to 85%.

This indicates that Tom Lee and BitMine are visibly accelerating the staking of their held ETH, transforming their ETH from merely a crypto asset waiting for price appreciation into an on-chain foundational asset with native yield capabilities.

For ordinary investors, the staking rate may just be a yield option, but for BitMine, it is becoming a treasury operation metric alongside ETH holdings, net asset value per share, and financing costs.

At the same time, BitMine has also launched its own institutional-grade staking platform, MAVAN, to serve its own ETH treasury, with plans to provide staking infrastructure to institutional investors, custodians, and ecosystem partners in the future.

This means that staking serves at least three roles for BitMine: first, it adds a layer of ETH-based yield to long-term holdings; second, staking rewards can be reinvested to increase the amount of ETH held by the treasury; finally, when its self-built validator capabilities are opened to the outside, the staking infrastructure itself may become a service business.

SharpLink further pushes this logic from native staking to active yield management. For it, basic staking yield is just the starting point; some already staked ETH can continue to enter on-chain yield funds, allocated to liquidity, lending, and other DeFi strategies.

Changes in Lido V3 occur at the infrastructure level. In the past, users and institutions mainly entered a unified liquid staking pool; now, institutions can use more independent staking vaults, choosing node operators, fee structures, and risk parameters while retaining the option to obtain stETH liquidity. This means that liquid staking is moving from a standardized product to a more isolated and customizable institutional-grade infrastructure.

Therefore, the competition among ETH treasury companies in the future may not only be about who holds more but also about who can manage these ETH at lower costs, higher online rates, and more comprehensive risk control.

From this perspective, ETH is also transforming from a crypto asset waiting for price appreciation into an asset that requires continuous operation.

3. Why is Staking More Important Even Though Yields Are Not High?

As of the time of writing, the overall staking APR for Ethereum is about 2.64%. To be realistic, this level is not particularly outstanding compared to some DeFi products, and as more ETH continues to participate in staking, this base yield may be further diluted.

However, the institutional demand for staking cannot be understood solely in terms of yield—staking reduces their opportunity cost of holding ETH long-term.

For short-term investors, an annual yield of 2% to 3% is unlikely to offset the price volatility of ETH itself, but for treasury companies, funds, or large addresses that have decided to hold ETH long-term, the issue is that since ETH is already on the balance sheet, they must continue to earn more ETH by participating in network security without giving up their price exposure to ETH.

This is easy to understand; for an ordinary user holding 100 ETH, a yield of 2.6% may not be significant; but for a treasury company holding millions of ETH, the same yield will generate considerable absolute income and gradually influence the number of ETH per share through long-term reinvestment.

This is also one of the important differences between ETH and BTC in treasury narratives.

Thus, when ETH enters institutional balance sheets, the treasury departments are not facing a static position but an on-chain asset that can be continuously deployed, accounted for, and adjusted.

Moreover, as institutional participation increases, native staking yields may also take on another function: serving as the yield benchmark for the entire ETH asset system.

This is easy to understand; for example, in the future, when a DeFi strategy promises yields of 5%, 8%, or even higher, institutions will need to compare not just "with yield" and "without yield," but rather how much more it earns compared to the approximately 2.6% native staking yield and what additional risks it entails.

Lending, liquidity provision, structured products, and re-staking strategies all need to prove their risk-return profiles against this base yield. From this perspective, the importance of staking in the next phase lies not only in how much ETH it brings to holders but also in its role as a foundational coordinate for measuring other on-chain strategies.

However, it should not be simply viewed as Ethereum's "risk-free rate"; stakers need to bear risks such as ETH price volatility, validator downtime, node failures, and potential penalties; participating through service providers also increases risks from operators and custodians; if they continue to enter DeFi, risks will accumulate with the layers of protocols and strategies.

In addition, a higher staking rate does not only have positive effects; if new funds are primarily concentrated in a few treasury companies, custodial institutions, liquid staking protocols, and node operators, it may exacerbate the centralization of validators, cloud service providers, and judicial jurisdictions.

Thus, as staking evolves from a network participation mechanism to an institutional asset allocation tool, Ethereum needs to address not only how to accommodate more funds but also how to maintain a balance between capital efficiency, institutional demand, and decentralization.

In Conclusion

Overall, from the initial requirement of 32 ETH for validator nodes at the launch of the Beacon Chain, to the lowering of participation barriers by liquid staking protocols, and now to treasury companies, self-built validator networks, and institutional on-chain yield funds, the changes in staking are essentially a reflection of the market's evolving understanding of ETH.

It initially served as a mechanism for participating in network consensus, then became a tool for ordinary users to earn on-chain yields, and now it is beginning to enter corporate balance sheets, custodial systems, and professional yield management frameworks.

For these long-term holders, a yield of 2% to 3% may not be impressive.

But as long as ETH is no longer just lying in addresses or custodial accounts waiting for price appreciation, but can participate in network security, earn protocol rewards, reinvest continuously, and maintain a certain level of liquidity, it will help accelerate its transformation into a foundational asset for other financial strategies.

This is the new era proposition for ETH.