The central theses
- Ethereum’s consensus layer deposit contract now contains over 12 million Ethereum, over 10% of the total supply.
- Over 360,000 validators have each locked at least 32 ETH into the contract, which allows funds to be moved from mainnet to the Beacon chain.
- The Beacon Chain is a parallel proof-of-stake version of Ethereum that the mainnet is expected to merge with in the future.
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The deposit contract for Ethereum’s consensus layer, formerly known as ETH 2.0, has surpassed 12 million ETH, which is worth nearly $34 billion at current prices. This means that more than 10% of the total Ethereum supply is now locked in the consensus layer deposit contract.
Ethereum merger progress
Despite shaky price action and an apparently delayed merger date, the appetite to secure the Ethereum network as it transitions from proof-of-work to proof-of-stake continues to grow.
According to Etherscan, the Ethereum consensus layer deposit contract has reached the 12 million ETH mark, which accounts for more than 10% of the total circulating supply of Ethereum. This represents a rapid growth rate as the deposit contract hit 10 million ETH on March 10th.
There are currently over 360,000 validators, each raising at least 32 ETH. The deposit deal is currently yielding an estimated 4.5% annually, although the post-lockdown funds can’t be fully released until after the Shanghai upgrade, which is currently scheduled for later this year.
The consensus layer escrow contract allows Ethereum to be moved from the Ethereum mainnet, which the Ethereum Foundation later called execution, to the Beacon chain. The Beacon Chain is a parallel proof-of-stake version of the Ethereum blockchain that launched in December 2020.
The long-awaited merge describes the moment when the Ethereum mainnet or execution layer merges with the Beacon Chain or consensus layer. This marks the network’s transition from proof-of-work, where transactions are validated in blocks (on the blockchain) by solving complex mathematical equations using computer hardware, to proof-of-stake, where transactions are validated by validators , who use their funds in the network. The merger was scheduled to happen in June, but has since been delayed.
Trent Van Epps of the Ethereum Foundation has emphasized that the merger should not only make the chain more secure, but is also estimated to reduce the energy consumption of the Ethereum network by up to 99.95%. In addition, the merger could reduce Ethereum’s annual output to net 0% from current net 3-5%.
In addition to the more than 12 million ETH now locked in the Beacon Chain custody contract, approximately 2.18 million ETH have been destroyed since Ethereum Improvement Proposal-1559 was launched in the London hard fork last August. This upgrade aimed to stabilize network transaction fees and introduced a base fee for Ethereum Burn.
Disclosure: At the time of writing, the author of this article owned BTC, ETH, and several other cryptocurrencies.
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