The amount of Ether (ETH) locked in smart contracts on Ethereum has reached a new record, exceeding 35% of the total supply. This strong demand reflects the growing utility of the Ethereum network.
Ethereum dries up its available supply, 35% of ETH now locked
Since the successful deployment of the proof-of-stake consensus mechanism with the famous “The Merge”, the number of active validators has continued to grow on Ethereum. Now, according to a recent tweet from BTC-ECHO analyst Leon Waidmann, more than 35% of ETH in circulation is locked in smart contracts.
This record proportion reflects the constant increase in the concrete use of Ethereum, beyond simple speculation. More and more ETH is being “committed” to the future of decentralized finance via staking, DeFi protocols or DAOs, rather than simply traded or sold.
This tendency background can be explained by two factors:
First, the voluntary locking of ETH into smart contracts proves sustained demand from users convinced of Ethereum’s long-term potential. They agree to lock up their funds, sometimes for long periods, in exchange for earnings such as interest or transaction fees.
Then, this new record reflects the growing usefulness of the Ethereum blockchain, now seen not only as a speculative asset, but also as a technological platform allowing the creation of cutting-edge decentralized applications in areas such as finance (DeFi), identity or governance (DAO).
A premise for the price of ETH to take off?
With the major Cancún technical update scheduled for March 13, 2024, which should significantly reduce transaction fees, as well as the high expectations surrounding the possible upcoming validation of Ether spot ETF by the SEC, Ethereum today seems armed to begin a powerful upward movement.
The price of Ether has also reached its highest point in 2024. And with all these ETH locked in smart contracts, the supply available on the markets is drastically reduced. A situation which further accentuates the bullish potential of Ether.
Many analysts therefore expect the “Ethereum rocket” to take off soon, driven by the combination of very strong demand and real utility which continues to grow. Blockchain seems to have reached critical mass, the premise for a new historic surge in the months to come.
In short, with more than a third of ETH now locked on the blockchain, Ethereum appears to have reached a tipping point that bodes well for the coming days. The enthusiasm of investors and developers suggests new records to come for the crypto star.
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