Ethereum’s ability to drastically cut down on its energy use last year has been a major boost to the cryptocurrency. It seemed like it could really become a new crypto leader. However, this success has come with some drawbacks, which are becoming apparent now. It will therefore be slowing down its crypto staking.
The Merge from last year proved to be highly energy efficient for their blockchain. Their staking feature is a key part of the strategy as well. However, this has also meant that the demand on their system is higher than ever before. Users have been flocking to the platform to take advantage of it. While this should be good news, they had not prepared for this sheer scale. Their system is now under strain.
Traders have staked around 20% of all available Ether, that being worth $41.5 billion. This staking process means that their exchange keeps Ether tokens in digital wallets. This aids in transactions and encourages the earning of yields. So with these sorts of crypto patterns, some analysts believe that this process could speed up considerably. They believe that users will already stake 50% of all these tokens by May 2024 and practically all of it by December.
Crypto Staking Platforms in Danger
The reason for this drive in staking crypto is that making profits this way is a guarantee. So, users have flocked to this platform. Staking Ether allows traders to profit by around 4%.
Such crypto bubbles could put the very existence of Ethereum in danger. So, despite the attention the platform is getting, the firm has to act now to slow things down.
The team is now working on ways to slow its crypto staking platform down. One way has been to limit the number of new validators on the platform. Now a new one will be able to join every 6 minutes. This buys the team time to figure out more long-term solutions.
