Key Takeaways
Ethereum transitioned from proof-of-work to proof-of-stake in September 2022 through the Merge, reducing energy consumption by over 99% and replacing miners with validators who stake ETH.
ETH holders can participate in staking to earn yield, with returns generally in the 2.5-4% range annually. Liquid staking protocols let holders receive tradable receipt tokens while their ETH earns rewards.
The combination of reduced proof-of-stake issuance and EIP-1559 fee burning has shifted ETH supply dynamics, with the total supply remaining relatively flat since the Merge.
Subsequent upgrades, Shapella (2023), Dencun (2024), Pectra (2025), and Fusaka (2025), have enabled staking withdrawals, reduced Layer-2 fees, and improved validator efficiency. The next upgrade is Glamsterdam.
Introduction
Ethereum is a leading blockchain platform for smart contracts and decentralized applications (DApps). On September 15, 2022, it completed the Merge, a landmark upgrade that permanently replaced proof-of-work mining with proof-of-stake validation.
For ETH holders, this transition reshaped how the network is secured, how ETH supply changes over time, and how holders can participate in the network's operation.
This article explains what proof-of-stake means for ETH holders today, covering staking mechanics, liquid staking, supply dynamics, and the upgrades that continue to reshape the Ethereum ecosystem.
How Proof-of-Stake Works on Ethereum
Under proof-of-stake, validators deposit ETH as collateral and are randomly selected to propose and attest to new blocks. This consensus mechanism replaces the energy-intensive mining hardware required under proof-of-work, cutting Ethereum's electricity consumption by approximately 99.95%.
To run a solo validator, you need a minimum of 32 ETH deposited into the Beacon Chain deposit contract. Validators earn rewards for proposing blocks and attesting to the validity of others. If a validator acts maliciously or goes offline for extended periods, a portion of their stake may be slashed, meaning it is permanently removed from circulation.
For most ETH holders, running a validator node independently is not practical due to the 32 ETH minimum, technical requirements, and penalties for downtime. As a result, the majority of staking participation happens through staking pools and liquid staking protocols.
What Staking Means for ETH Holders
As of June 2026, over 34 million ETH is staked across more than one million active validators. Staking yield fluctuates based on the total amount of ETH staked, but has generally remained in the 2.5-4% range annually since the Merge. When more ETH is staked, the per-validator reward rate declines, and vice versa.
liquid staking has become the dominant way for most holders to participate. Instead of locking up 32 ETH and running validator software, holders can deposit any amount of ETH with a liquid staking protocol and receive a tradable receipt token, such as stETH or rETH, that represents their staked position plus accrued rewards.
These receipt tokens can be used across DeFi applications, allowing holders to earn staking yield while keeping their capital productive elsewhere.
Restaking protocols have emerged as an additional layer on top of staking, letting staked ETH simultaneously secure other networks or services for extra yield. This innovation has expanded the utility of staked ETH but also introduces additional smart contract risk that holders should be aware of.
Staking withdrawals became possible with the Shapella upgrade in April 2023. Before that, all staked ETH was locked with no exit mechanism. Today, validators can request partial withdrawals, which skim rewards above 32 ETH automatically, or full withdrawals, which exit a validator entirely and return the full principal plus rewards. The Ethereum Improvement Proposals (EIPs) process governs these types of protocol changes.
How Proof-of-Stake Changed ETH Supply Dynamics
Under proof-of-work, Ethereum issued approximately 13,000 ETH per day to miners, creating consistent sell pressure as miners sold ETH to cover electricity and hardware costs. Under proof-of-stake, daily issuance dropped by roughly 90%, to around 1,700-2,000 ETH per day depending on the total amount staked.
This reduced issuance works alongside EIP-1559, implemented in August 2021, which burns a portion of every transaction fee. During periods of high network activity, the burned fees can exceed the newly issued ETH, resulting in a net reduction of total supply.
Since the Merge, ETH supply has remained relatively flat, with periods of slight deflation during high-activity events.
For holders, lower issuance means reduced dilution. However, supply changes alone do not determine price, and market conditions, adoption trends, and overall demand remain the dominant factors.
Key Upgrades Since the Merge
The Merge was not a one-time event. It laid the foundation for a series of upgrades that continue to reshape Ethereum. Here is what each major upgrade means for ETH holders.
Shapella (April 2023)
Shapella (Shanghai + Capella) enabled staking withdrawals for the first time. This removed the uncertainty around whether staked ETH could ever be accessed, which was a significant concern before the upgrade. The ability to withdraw made staking more attractive and contributed to a steady increase in total ETH staked.
Dencun (March 2024)
Dencun (Cancun + Deneb) introduced EIP-4844, also known as proto-danksharding, which added a new data type called blobs for Layer-2 scaling solutions to post transaction data cheaply. This dramatically reduced fees on Layer-2 networks, often by 90% or more. For ETH holders, Dencun confirmed Ethereum's strategic direction: Layer 1 serves as the settlement and security layer, while most user activity scales on rollups.
Pectra (May 2025)
Pectra (Prague + Electra), launched on May 7, 2025, was the most comprehensive upgrade since the Merge. For stakers, EIP-7251 raised the maximum effective validator balance from 32 ETH to 2,048 ETH, letting large operators consolidate many validators into fewer, higher-balance ones while earning compounding rewards. Solo stakers still enter at 32 ETH but can now auto-compound above that threshold.
For everyday users, EIP-7702 introduced smart-wallet-like features for standard accounts, including transaction batching, gas sponsorship by third parties, and account recovery mechanisms. For scaling, EIP-7691 increased blob throughput, further reducing Layer-2 data costs.
Fusaka (December 2025)
Fusaka (Fulu + Osaka), launched on December 3, 2025, introduced PeerDAS (Peer-to-Peer Data Availability Sampling), which lets nodes verify data availability without downloading entire blobs. This increased data throughput several times beyond Pectra levels, further lowering costs for rollups.
Fusaka also brought Enshrined Proposer-Builder Separation (ePBS), formalizing the split between block proposers and builders at the protocol level for improved MEV management and decentralization.
The Roadmap Ahead
The next scheduled upgrade is Glamsterdam (Amsterdam + Gloas), which is expected to build on Fusaka by further expanding blob throughput and continuing the account abstraction work begun in Pectra.
Beyond Glamsterdam, the Ethereum community is working toward full danksharding for massive data availability scaling, Verkle Trees for smaller proofs that enable lightweight stateless clients, and inclusion lists for improved censorship resistance.
These long-term goals aim to make running a node easier while dramatically increasing rollup capacity. For ETH holders, the practical outcome is a network that can potentially support global-scale usage while maintaining strong security guarantees.
The original plan for 64 execution shard chains was redesigned into this rollup-centric strategy, where Ethereum provides abundant, cheap data space for Layer-2 networks to post transaction proofs rather than sharding execution across parallel chains.
FAQ
Do I need 32 ETH to stake on Ethereum?
To run a solo validator, yes. The minimum deposit is 32 ETH. However, most ETH holders stake through liquid staking protocols or centralized exchanges, which accept any amount. You receive a receipt token representing your staked position and can withdraw at any time through secondary markets or protocol-level exits.
Is my staked ETH locked forever?
No. Since the Shapella upgrade in April 2023, validators can withdraw their staked ETH through partial withdrawals (rewards above 32 ETH) or full withdrawals (exiting the validator entirely). Liquid staking protocols typically let you exit by swapping your receipt token back to ETH on a decentralized exchange or redeeming it through the protocol.
How has proof-of-stake affected ETH transaction fees?
The Merge itself did not directly lower fees. However, subsequent upgrades, Dencun, Pectra, and Fusaka, expanded blob space that dramatically reduced costs for Layer-2 rollups. Users transacting on Layer-2 networks now typically pay a fraction of what Layer 1 transactions cost, often well below $0.01 during normal network conditions.
Why did the Ethereum Foundation stop using the term Eth2?
The Foundation moved away from "Eth2" branding to avoid the misconception that proof-of-stake Ethereum is a separate network requiring users to migrate their assets. All upgrades apply to the same continuous chain, and no action was required from ETH holders. The term Ethereum 2.0 is still used informally in community discussions and educational content.
What are the risks of liquid staking?
Liquid staking introduces smart contract risk, meaning a bug in the staking protocol's code could potentially lead to loss of funds. There is also depegging risk, where the receipt token trades below the value of the underlying ETH.
Additionally, restaking protocols add layers of complexity and additional smart contract dependencies. As with any on-chain activity, holders should research protocols independently before depositing.
Closing Thoughts
Ethereum's transition to proof-of-stake has fundamentally changed what it means to hold ETH. The Merge eliminated energy-intensive mining, subsequent upgrades enabled staking withdrawals and dramatically reduced Layer-2 fees, and the supply dynamics shifted from heavy daily issuance toward a flatter trajectory.
For holders, staking offers a way to participate in network security and earn yield, whether through solo validation, liquid staking protocols, or staking services.
With Glamsterdam on the horizon and long-term goals like full danksharding and Verkle Trees in active development, Ethereum's evolution continues. The foundational pieces are now firmly in place, and the focus has shifted from whether proof-of-stake would work to how far it can scale.
Further Reading
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