Ethereum’s validator queues have almost reached zero, suggesting that the staking demand is episodic rather than consistent. Staking rewards have tightened to approximately 3%, curbing the motivation for substantial shifts in staking behavior. Ethereum’s DeFi total value locked continues to show fragmentation, as ecosystems such as Solana and Base are experiencing incremental growth, which in turn impacts ETH’s value capture. Ethereum’s staking queues have cleared, allowing the network to seamlessly accommodate new validators and exits in near real-time. The urgency to secure ETH has diminished for the time being, with staking transitioning into a stable phase rather than a scarcity-driven market. Queues represent the duration required to initiate or cease staking on the Ethereum network, serving as both a sentiment indicator and a measure of liquidity. In a certain light, the absence of queues serves as a feature rather than a flaw, demonstrating that Ethereum is capable of managing staking flows without the need to lock up liquidity for extended periods.
Simultaneously, staking rewards have tightened to around 3% as the total staked ETH increased at a pace outstripping both issuance and fee income. This dynamic has constrained incentives for significant movements in either direction, resulting in queues hovering close to zero, despite a sustained high level of overall staking participation. Lower yield can indicate crowding, but it may also signify a heightened ‘trust premium’ — an increasing amount of ETH is opting to remain in staking instead of being listed on exchange order books. In straightforward terms, this indicates that “staking pressure” is no longer a daily topic of discussion. When queues stretch out, ETH supply is being locked at a pace that outstrips the network’s ability to onboard validators, leading to a palpable sense of scarcity. When queues hover around zero, the system approaches a state of neutrality. Individuals have the ability to stake or unstake without the lengthy waiting periods, transforming the staking process from a one-way door into a more fluid allocation. This shifts the mindset regarding the ether trade.
Staking continues to alleviate immediate sell pressure; however, it does not equate to coins being locked away. As withdrawals operate seamlessly, ETH is transitioning from a forced lockup asset to a yield-bearing position that can be adjusted in response to changing sentiment. Currently, Ethereum’s staking supply hovers around 30%, significantly trailing the 50% forecasted by Galaxy Digital for the end of 2025. Anticipations Galaxy predicted that ETH would maintain prices above $5,500 due to a staking-induced supply shock, and that layer-2s would surpass layer-1s in economic activity; however, these expectations did not come to fruition. Ethereum’s DeFi total value locked is currently approximately $74 billion, significantly lower than its peak of about $106 billion in 2021. This decline comes despite a near doubling of daily active addresses during the same timeframe, as reported. The network continues to represent nearly 58% of the total DeFi TVL, yet this figure conceals a more fragmented landscape. Incremental growth is increasingly being captured by ecosystems such as Solana, Base, and bitcoin-native DeFi, allowing activity to expand across the Ethereum orbit without translating into the same concentration of value or demand for ETH itself.
The significance of that fragmentation cannot be overlooked, as Ethereum’s most compelling bullish narratives were once straightforward. Increased usage translates to higher fees, greater burns, and intensified structural pressure on supply. The peak of TVL in 2021 marked a period of leverage; a reduced TVL today doesn’t inherently indicate diminished usage, but rather a decrease in speculative excess. In the present landscape, a significant portion of user engagement is occurring on layer-2 networks, where transaction fees are lower and the overall experience is more seamless. However, the value that ultimately returns to ETH may not be immediately apparent to market observers at this time.”One way to frame it is that Ethereum has lost directional clarity,” shared Bradley Park in a note.” If ETH is treated primarily as a trust asset to be staked rather than actively used, it weakens the burn mechanism: less ETH gets burned, issuance continues, and sell-side pressure builds over time.”In the last 30 days, Base has outperformed Ethereum in terms of fee generation by a substantial margin. “That contrast raises a harder question for Ethereum, whether its current trajectory adequately channels usage back into value for ETH,” Park added. The disparity between activity and value capture is becoming evident in prediction markets. Traders on Polymarket are currently assigning only an 11% probability that ETH will hit a new all-time high by March 2026, even with the increase in active addresses and its continued strong presence in DeFi total value locked. The current pricing indicates that the market perceives fragmentation and an unconstrained staking supply as significant limitations, suggesting that mere usage is no longer adequate to push for a challenge against the all-time high. However, that scenario could change rapidly if U.S. policy adapts to permit yield-bearing ETH products, a development that would reignite the ‘staking premium’ trade.