Staking of Ethereum has reached all-time highs due to the US debt limit and falling faith in institutions

The continuing U.S. debt limit situation, lack of faith in the U.S. currency, bank failures, and the high APR gave on ETH staking all contributed to May’s record-breaking rise in Ethereum staking.

In May, the total amount of Ether staked hit a record high of 2.96 million ETH, or around 2.46 percent of the entire supply.

More than twice as much ETH was staked than in any previous month on record (not including withdrawals).

The Shapella update on April 12 that allows validators to withdraw their staked ETH after two years has triggered a dramatic increase in the amount of ETH that has been staked in less than a month. Many people back then were worried that a large-scale unstaking of ETH would be bad for the Ethereum network. The sale of staked ETH is believed to be less than 1% of the total after Shapella.

Staked ETH has already exceeded withdrawals since the beginning of May. As of right now, May accounted for about 18% of total ETH staking.

Several variables, including the United States debt limit drama, faith in the U.S. currency, bank failures, and the high annual percentage rate (APR) given on ETH staking, were blamed for the unprecedented increase in staking activity in May. Researcher Brian McColl has concluded:

“Since the U.S. debt limit drama and the previous occurrences with banks going bankrupt, it’s no surprise that more and more people would rather gamble with their money in Ether (ETH) than keep it in the bank. The debt ceiling is a legal restriction on how much the U.S. government may borrow to pay down its debt.”

Also Read: Circle Isolating USDC From Potential US Debt Crisis