$5M staked in eight hours as community cautiously backs ETH 2.0

The long-awaited deposit contract for Ethereum 2.0 has finally been deployed, opening the doors to staking opportunities for ETH holders.

Deposits began in earnest, with over $1 million in ETH landing in the contract within the first half hour, according to observer The Crypto Cactus.

“$1,000,000 locked in $ETH 2.0 in 30 minutes … Just remember for anyone staking, one way bridge. I have sent across 32 ETH.”

At the time of writing, around eight hours after the official announcement, just over 14,000 ETH has been staked, according to the ETH 2 Launchpad. At today’s prices, that equates to roughly $5.5 million. In order for the Beacon Chain mainnet genesis event to be initiated, 524,288 ETH from 16,384 validators is required.

The Ethereum team and several community members have targeted Dec. 1 as the date at which this will occur. The target amount must be in the contract seven days before the Phase 0 launch, otherwise it will be delayed for a week until after the threshold has been met.

The deposit contract launch has sparked a debate over staking within the crypto community, and there appears to be some hesitancy among regular investors so far. In its third-quarter DeFi report, ConsenSys suggested that higher yielding opportunities in DeFi could hinder staking participation.

By way of comparison, the $5 million deposited is just a third of what DeFi degens dumped into the unaudited, unreleased, hacked Eminence contract while developer Andre Cronje was sleeping.

Part of the reason for the hesitation could be that ETH staked on Beacon Chain needs to be locked up for a long period, leading some to question whether the returns justify the means. The ETH 2 Launchpad explains:

“Transfers between validators are disabled until at least phase 1. Validators will have to wait until phase 2 (around two years) to be able to withdraw to a specific shard.”

Diehard Ethereans such as Ethhub founder and Daily Gwei author Anthony Sassano remain unperturbed.

Seeing a lot of hot (and dumb) takes about eth2 today.Regardless of what these people say I will be staking my ETH in phase 0 knowing full well the risk that I am taking.I have waited for this for almost 3 years - the concern trolls are not going to stop me.

— Anthony Sassano | sassal.eth ⛽ (@sassal0x) November 4, 2020

Fellow Ethereum advocate Ryan Sean Adams, who recently posted a “how to” guide for those thinking of staking, described it as:

“This is the initial bond offering for the largest non-sovereign global economy the world has ever seen.”

Annual returns diminish fast, however, with the more ETH that is staked. Five million ETH staked will yield around 7%, which will fall to just under 5% when 10 million ETH is staked.

At the moment, there is a lot of excitement in the Ethereum community, as many have waited so long for things to get going on ETH 2.0. ETH prices reacted to the news with a 5% jump over the past 24 hours to reach $405.