When ETH Delves into the Balance Sheet: The Next Stage of Staking's Historical Positioning, Where Is It Headed?

Now, if you want to become an Ethereum validator directly, you'll have to wait in line for over a month first.

As of July 22, there are still approximately 2.5 million ETH in the Ethereum staking entry queue, with an estimated waiting time exceeding 43 days. In contrast, the exit queue waiting time is only a few minutes, almost negligible.

Just looking at the numbers, it's clear that more and more ETH staking is absorbing market circulation.

But more noteworthy than the increase in staking scale is that the queue is starting to become a capital efficiency issue. After all, for ETH treasury companies and institutions choosing the native staking path, a wait of over 40 days means a significant amount of assets temporarily cannot generate staking rewards. Asset allocation, liquidity arrangements, and opportunity costs all need to be recalculated.

Ultimately, when ETH is more deeply integrated into balance sheets, the issues faced by Staking are no longer just about "how to get more people involved," but begin to evolve into a more traditional and complex set of asset management problems.

1. Staking Rate Hits a New High, How Should We Understand the Queue?

Ethereum's current high staking rate didn't form suddenly at a single point in time.

In 2023, the Shapella (Shanghai + Capella) upgrade unlocked staking withdrawals, allowing validators to reclaim their staked principal and rewards at the protocol level. This created a relatively complete entry, operation, and exit loop for ETH Staking. Subsequently, the LSD-based derivatives market expanded rapidly, driving the ETH staking rate higher and higher.

As of the time of writing, the total amount of ETH staked has exceeded 40 million, worth approximately $140 billion at current prices, representing over 33% of the total supply. This is a significant increase from the roughly 10% staking rate a few years ago, marking an all-time high.

In other words, currently, for every 3 ETH, more than 1 is being staked.

With the staking rate at a record high, the persistently large entry queue also reveals a new problem.

As is well known, the Ethereum entry and exit queues are essentially a speed-limiting mechanism designed to protect the stability of the consensus. New ETH cannot enter the validator set without limits simultaneously, nor can exits be concentrated in a short period. The protocol sets the amount of ETH that can be processed per Epoch based on the current validator count. When the funds applying to enter or exit exceed this processing capacity, a queue forms.

From this perspective, the 2.5 million ETH waiting in the queue primarily indicates that the market demand for staking capacity far exceeds the speed at which the protocol can currently release it. This could include newly entering long-term capital, treasury companies deploying existing holdings, staking service providers adjusting their validator structures, and institutions transferring ETH from custody accounts into the staking system.

Thus, this sends a clear signal: at least in the current phase, there is far more capital willing to commit ETH to the staking system than capital actively withdrawing from the validator set.

This is a significant departure from the staking logic of the early Beacon Chain days.

Initially, ETH Staking was more like a network participation mechanism for technical users, solo validators, and long-term Ethereum supporters. Participants ran nodes, maintained the network, and bore technical risks in exchange for protocol rewards.

With the rise of liquid staking, it gradually became a product for regular token holders to generate on-chain yields. For example, exchange staking, staking-as-a-service, and staking pools lowered the technical barrier. Liquid staking protocols like Lido and Rocket Pool further unlocked the usability of staked funds, allowing users to obtain liquid staking tokens like stETH and rETH after staking ETH. These tokens can not only be transferred and traded but also used in lending, liquidity pools, and other DeFi protocols.

Now, with large amounts of ETH entering corporate treasuries, fund products, and professional custody systems, Staking is undoubtedly moving into a third phase, transitioning from 'who can participate in staking' to 'how large-scale ETH should be managed.'

Of course, the institutionalization mentioned here doesn't mean early staking was dominated by retail, nor does it mean institutions will replace ordinary users. More accurately, the focus of market discussion is shifting:

Previously, the focus was on how ordinary users could obtain staking yields. Now, it's beginning to focus on how staking becomes a standardized treasury management capability when hundreds of thousands or even millions of ETH enter a company's balance sheet.

2. Structural Changes Behind Institutions Like BitMine

The emergence of ETH treasury companies is making this change more tangible.

The core logic of a Bitcoin treasury company is to continuously accumulate BTC through financing and capital market operations, increasing the BTC per share. However, for ETH treasury companies, merely holding the asset is not the endpoint of the strategy.

After all, BTC itself has no native staking yield at the protocol level. Holders seeking additional returns typically need to introduce lending, custody, derivatives, or other counterparty risks. ETH, on the other hand, can directly participate in Ethereum consensus and earn protocol rewards without selling the asset.

This gives an ETH treasury an extra layer of operational capacity: besides deciding how much ETH to buy, it must also decide how to deploy that ETH.

BitMine's actions are a concentrated expression of this institutional language.

According to its latest disclosed data, as of July 19, BitMine held a total of 5,777,468 ETH, representing approximately 4.8% of the total ETH supply. Of this, a total of 4.917 million ETH was staked, accounting for 85% of its total ETH holdings, valued at approximately $9.2 billion.

Based on the ETH price at the time and BitMine's own 2.67% seven-day annualized staking yield, the company is expected to generate approximately $247 million in staking income annually. If all its ETH were fully staked, the estimated annualized rewards could reach around $290 million.

What's more noteworthy is the speed of this change.

In early February this year, BitMine had approximately 2.8975 million ETH staked, representing about 67% of its holdings. By mid-July, its staked amount had increased to approximately 4.9172 million ETH. This means that in less than half a year, BitMine newly deployed over 2 million ETH, and its staking coverage ratio increased from about two-thirds to 85%.

This indicates that Tom Lee and BitMine are visibly staking the ETH they hold, transforming their ETH from just a crypto asset waiting for price appreciation into a foundational on-chain asset with native yield-generating capabilities.

For ordinary investors, the staking rate might be just a yield option, but for BitMine, it is becoming a treasury operational metric on par with ETH holdings, net asset value per share, and financing costs.

Simultaneously, BitMine has launched its own institutional-grade staking platform, MAVAN, to service its own ETH treasury. It also plans to offer staking infrastructure to institutional investors, custodians, and ecosystem partners in the future (see also: Hong Kong Ethereum Observation: When the 'World Computer' Meets 'Yield-Bearing Assets', How Do Two ETHs Resonate?).

This means Staking serves at least three roles for BitMine: First, it adds a layer of ETH-denominated yield to long-term holdings. Second, staking rewards can be continuously compounded, increasing the amount of ETH in the treasury. Third, when the capability to run validators is opened externally, the staking infrastructure itself can become a service business.

SharpLink takes this logic a step further, moving from native staking to active yield management. For it, basic staking yield is just the starting point. Part of the staked ETH can be further deployed into on-chain yield funds, allocated to DeFi strategies like liquidity provision and lending.

Changes in Lido V3 occur at the infrastructure layer. Previously, users and institutions mainly entered a unified liquid staking pool. Now, institutions can use more independent staking vaults, choosing their own node operators, fee structures, and risk parameters, while retaining the option to access stETH liquidity. This signifies liquid staking is evolving from a standardized product towards isolable, customizable institutional-grade infrastructure.

Therefore, the competition among ETH treasury companies in the future may not only be about who holds more, but also who can manage this ETH at a lower cost, with higher uptime, and more robust risk control.

From this perspective, ETH is transforming from a crypto asset waiting for price appreciation into an asset that requires continuous operation.

3. Yields Are Not High, So Why is Staking Becoming More Important?

At the time of writing, Ethereum's overall network staking APR is approximately 2.64%. To be frank, compared to some DeFi products, this level is not particularly outstanding, and as the amount of ETH staked continues to increase, this base yield could face further dilution.

However, institutional demand for Staking cannot be understood solely by yield rates – staking reduces the opportunity cost of holding ETH long-term.

For short-term investors, a 2% to 3% annualized return hardly compensates for ETH's own price volatility. But for treasury companies, funds, or large addresses that have already decided to hold ETH long-term, the question is different. Since the ETH is already on the balance sheet, they must generate more ETH by participating in network security, all without giving up their ETH price exposure (see also: When Wall Street's ETH Starts 'Earning Interest': From BlackRock's ETHB to the Shift in Ethereum's Asset Attributes).

This is easy to understand. For an ordinary user holding 100 ETH, a 2.6% yield might not be significant. But for a treasury company holding millions of ETH, the same yield rate generates substantial absolute income, which can gradually affect the amount of ETH per share through long-term compounding.

This marks another key difference between ETH and BTC in their treasury narratives.

Therefore, when ETH enters an institution's balance sheet, the treasury department faces not a static position, but an on-chain asset that can be continuously deployed, accounted for, and adjusted.

Moreover, as institutional participation increases, native staking yield might take on another function: becoming the benchmark yield for the entire ETH asset system.

This is easy to grasp. For instance, in the future, when a DeFi strategy promises 5%, 8%, or even higher yields, institutions need to compare not just 'with yield' versus 'without yield,' but how much more it earns relative to the ~2.6% native staking yield, and what additional risks it incurs.

Lending, liquidity market making, structured products, and restaking strategies all need to prove their risk-return profile is reasonable relative to this base yield. From this perspective, the importance of Staking in the next phase lies not only in how much ETH it brings to holders, but also in its role as the underlying benchmark for measuring other on-chain strategies.

However, it still cannot be easily considered Ethereum's 'risk-free rate.' Stakers bear risks such as ETH price volatility, validator downtime, node failures, and potential slashing. Participating via service providers adds operational and custodian risks. If further deployed in DeFi, risks multiply with each additional layer of protocol and strategy.

Furthermore, a higher staking rate isn't just positive. If new capital is primarily concentrated in a few treasury companies, custodians, liquid staking protocols, and node operators, it could exacerbate centralization among validators, cloud service providers, and jurisdictions.

So, as staking evolves from a network participation mechanism into an institutional asset allocation tool, Ethereum needs to solve not just how to accommodate more capital, but also how to maintain a balance between capital efficiency, institutional demands, and decentralization.

Final Thoughts

Overall, from the initial 32 ETH validator requirement of the Beacon Chain era, to liquid staking protocols lowering participation barriers, and now to treasury companies, self-built validator networks, and institutional on-chain yield funds, the changes in Staking fundamentally reflect changes in how the market understands ETH.

It began as a mechanism for participating in network consensus, then became a tool for ordinary users to generate on-chain yields, and now is entering corporate balance sheets, custody systems, and professional yield management frameworks.

For these long-term holders, a 2% to 3% yield might not be breathtaking.

But as long as ETH no longer merely sits idle in addresses or custody accounts waiting for price increases, and can instead participate in network security, earn protocol rewards, compound continuously, and maintain a degree of liquidity, it will accelerate its transition into the foundational asset for other financial strategies.

This is the new defining proposition for the ETH era.