Grayscale is exposing a problem of staking large reserves of ETH – the waiting time to stake the tokens is growing fast. Grayscale is trying to open its ETP to staking, preparing to deposit up to 300,000 tokens.
Grayscale is performing a stress test on whether Ethereum ETF can also add staking. The investment company has a goal of staking 300,000 ETH as part of its staking Ethereum ETP. However, the nature of staking means the process may take longer than expected.
Waiting time for Beacon Chain deposits jumped to 23 days after Grayscale started depositing ETH from its ETP. | Source: ETH Validator Queue
So far, Grayscale has sent out 51,000 ETH for staking – and has become one of the main causes for growing the entry queue for the Beacon contract. The first time Grayscale started staking ETH, waiting time was as low as two days.
The queue is now the longest since 2019, when proof-of-stake was introduced and brought the initial rush to stake ETH.
Grayscale’s deposits expand waiting time
After the initial series of coin deposits, the queue is now up to 23 days for deposits and as much as 41 days for withdrawals. The Grayscale Ethereum Mini Trust made its last deposit of 3.2K ETH a day ago, now still waiting for the contract to process the tokens and accept Grayscale as a validator.
Grayscale’s activity made up 86% of deposits to the Beacon Chain, showing that just one large entity could significantly affect the waiting time. The activity for Grayscale started just after the approval for the first US staking ETPs, as Cryptopolitan reported.
Overall, withdrawal demand remains higher, but Grayscale alone could further extend the queue. The staked ETH may then remain relatively illiquid, meaning staking ETF may face different challenges in ensuring liquidity.
Usually, ETF react to user demand, quickly buying or selling ETH as needed, based on the actions of mainstream traders. However, selling pressure on a staking ETF may make it impossible to move coins on time, especially with growing demand for withdrawing from the Beacon Chain contract.
Other entities are awaiting approval in the coming months, bringing additional potential stress-tests to the Beacon chain contract. The full effect of delay times is yet to be seen, as the products are still in their very early stages. Potentially, Grayscale could stake up to 1.5M ETH.
Grayscale also adds Solana staking
Grayscale has accelerated its staking efforts, adding Solana as its next asset to unlock passive income. For Grayscale, staking is now live for Grayscale Ethereum Trust ETF (ETHE), Grayscale Ethereum Mini Trust ETF (ETH), and Grayscale Solana Trust (GSOL).
Grayscale will stake the reserves of its Solana trust, selecting Figment as its liquid staking provider. Figment will also assist Grayscale in achieving the desired level of ETH staking. Figment is a long-running validator on both Solana and Ethereum, with prior experience in staking ETP for the Canadian market.
Figment already carries over $18B in assets under management, handling staking for third-party clients on a total of 40 protocols.
