According to a research report published by Coinbase on Friday, the Ethereum blockchain validator queue has emptied for the first time since the Shanghai upgrade in May. This indicates a decline in the activity of the Ethereum network.
Decline in Staking Yields
Another notable point is the decline in staking yields. In recent months, there has been a surge in demand from investors to earn profits through staking in Ethereum, resulting in a significant increase in the number of validators. However, as the number of validators increased, staking yields decreased from 5% to 3.5%. Simply put, validators lock up Ethereum and verify transactions in exchange for rewards. The Shanghai upgrade introduced a significant change in this locking system; it allowed for the staked Ethereum to be withdrawn for the first time.
*When more users participate in staking, the reward pool is divided among a larger number of participants. This leads to a decrease in the yield per person.
Increase in Activity…
Coinbase predicts that if the fundamental activity and transaction fees on the Ethereum network remain stable, staking yields will remain consistent despite a decline in validator growth.
Lastly, the report emphasizes that while the activity on the Ethereum mainnet remained steady during the third quarter, there was an increase in the total number of transactions.