• Ethereum recently completed its much anticipated Merge upgrade, allowing users to earn yield from staking their Ether tokens.
• Staking of Ether tokens has become increasingly popular, with 19% of the total supply staked.
• It remains uncertain as to where the APY may land in the future, with many analysts predicting low yields of 1-2%.

Ethereum’s Merge Upgrade

In September 2022, Ethereum completed its long-awaited Merge upgrade which enabled a proof-of-stake consensus. This essentially allows users to stake their Ether tokens and earn yield on them. Since then, an increasing amount of Ether has been staked; currently standing at 19% of the total supply.

Stakers Earning Yield

Stakers are currently earning approximately 4% APY from their Ether tokens. However, this is divided among all stakers meaning that as more users stake, the overall APY decreases. Demand on the network can also increase gas fees which may contribute to higher APYs for those staking larger amounts of Ether.

Shapella Upgrade Impact

The Shapella upgrade in April allowed for previously locked up stakes to be withdrawn and had some concerned about potential sell pressure on Ethereum’s price due to withdrawals en masse. However instead staking has only grown since then with no significant withdrawal activity yet recorded.

Comparing Other Coins

Ethereum still lags behind other leading coins when it comes to its ratio of staked market cap compared to total supply; at 19%, it falls significantly short of other leading proof-of-stake coins such as Cosmos (60%) and Tezos (67%).

Predictions For Yield

It remains up for debate as to where Ethereum’s yield will land going forward despite many analysts predicting basement level yields of 1%- 2%. Ultimately there are several factors at play that will determine where exactly this yield will end up being; including gas fees and how many users continue to stake their tokens.

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