The supply defense wall once believed to be strong has proven fragile. The amount of Ethereum locked in staking contracts hit an all-time high, reaching 41.7 million ETH as of August 10, 2026. This figure is equivalent to 34.5% of the total circulating supply, which stands at around 120.7 million ETH. On paper, this scarcity should support the asset’s value. In reality, the ETH price fell 44%, dropping from $3,400 in January to $1,900 when this Bitfinex report was published.
This condition shows an extreme divergence. Staking growth began to accelerate in February 2026 and has continued to climb, adding 5.5 million ETH to the locked supply from January’s level of 36.2 million ETH, or 30% of the total supply. This reality proves that on-chain scarcity is unable to stem the wave of selling pressure coming from exchanges.
Institutions Continue to Reap Profits
Despite the declining asset value, deep-pocketed entities are still booking daily profits. BitMine delegated 4.9 million ETH into staking protocols as of July 12, accounting for 85% of their total Ethereum holdings. This business move generated a profit of $45.7 million from validation activities in the quarterly report ending May 31. BitMine executive Tom Lee even projected annual revenues of up to $284 million if his company decides to lock up its remaining crypto reserves.
SharpLink chose a similar path by depositing the majority of their ETH treasury into the validation space. Network rewards continued to flow even though they had to swallow a loss of $394.3 million in the second quarter. This wave of coins swelled further after Morgan Stanley included staking provisions in their draft Ethereum ETF. The asset validation queue reached 3.64 million ETH as of May 18, a massive volume requiring a waiting time of about 63 days. This maneuver follows in the footsteps of Grayscale, which successfully distributed staking yields worth $9.4 million to ETHE holders in January - the first yield distribution step for a registered product in the United States.
Proposed Cuts Loom
This heavy enthusiasm for locking up coins has begun to trigger debates at the foundational layer of the ecosystem. The proposed EIP-8363 upgrade, or Tapered Issuance Burn, is currently in the technical review phase to burn a portion of network rewards, targeting reductions as the staking ratio approaches 50% of the total circulating supply.
The idea of reducing yields immediately drew strong reactions. SharpLink CEO Joseph Chalom stood at the forefront and rejected EIP-8363. He argued that the network’s native yield is the primary allure drawing capital inflows from institutional investors.
For day traders waiting for positive sentiment from a shrinking coin supply, this staking record acts as a wake-up call. Coins securely locked within the network have proven powerless when forced to face the flow of cash sales in the open market.
Reported from crypto.news.
Read also: How Crypto Staking Works and Its Risks
Disclaimer: This article is for informational and educational purposes only, not financial advice. Cryptocurrency assets are highly volatile and carry significant risk. Always do your own research (DYOR) and never invest more than you can afford to lose.
