It's been over a month since the Ethereum Pectra upgrade went live on mainnet on May 7, 2025 and we can already see significant changes in the habits of institutional investors towards ETH.
But before we dive into that, a quick memory refresher on the Pectra upgrade and what EIP-7251 is really about. I wrote on this on May 10th, with a specific focus on what EIP-7251 meant for the decentralization of Ethereum.
Ethereum is the top layer one (L1) blockchain with smart contracts capabilities by most things you can think of, from developer activities, to market capitalization of native governance asset, to total value locked (TVL) in native DeFi protocols and alongside all of this, it is also one of top chains with questionable decentralization as lots of controversies exists around its governance.
Some notable realities is that over 25% of staked ETH is controlled by Lido liquid staking protocol, with Binance and Coinbase following with 7.5% and 7.4% stake control, respectively.
Evidently, there's an indisputable centralization risk when it comes to Ethereum, and if things weren't already that bad, the recent Pectra upgrade further enabled institutions to more cheaply get involved with Ethereum's governance.
Pectra upgrade: a look at EIP-7251
Ethereum's latest hard fork, the Pectra upgrade is considered Ethereum's most feature-packed upgrade since Dencun and the most significant hard fork since the merge.
With the inclusion of 11 Ethereum Improvement Proposals (EIPs) in the Pectra upgrade, which has been widely reported to have gone through smoothly, this has evidently been a significant accomplishment for the leading L1 for smart contracts and decentralized apps developments.
EIP-7251, an improvement proposal for the Ethereum network that aims to address the issue of ‘redundant validators, was part of the recent Pectra upgrade which means that staking cap has effectively been increased from 32 ETH to 2,048 ETH.
This is an excerpt from the previous article I wrote on the topic, posted on May 10th, here on INLEO.
What the EIP-7251 does is that it allows individuals or institutions running validator nodes to do it more efficiently(cheaply). For instance Lido partners can essentially go from running 300,000 validators to running just about 4,687.
This means that the Pectra upgrade made running validator nodes at least 63x cheaper.
Staked Ethereum hits 35M ETH: EIP-7251 worked!
The supply of staked Ether reached an all-time high this week, signaling growing investor confidence and a squeeze on the liquid supply of the world’s second-largest cryptocurrency.
Over 35 million Ether coins are now staked under the Ethereum blockchain’s proof-of-stake consensus model, according to data from Dune Analytics.
Over 28.3% of the total Ether supply is now locked into smart contracts and is unsellable for a pre-determined time in exchange for generating passive income for investors.
Over 500,000 ETH has been staked in the first half of June, signaling “rising confidence and a continued drop in liquid supply,” said pseudonymous CryptoQuant author Onchainschool in a Tuesday post. — Cointelegraph report
About 32 million ETH were staked prior to the Pectra upgrade, with recent reports highlighting a growth to 35 million, as much as 3 million ETH has been staked since the upgrade.
This shows that as planned, the Ethereum ecosystem has succeeded in enabling institutions to more easily get involved with Ethereum's governance.
It's truly applaudable that the actual goal for the EIP-7251 was achieved just a little over a month after the upgrade went live on mainnet.
Just a while ago, a Sports betting platform, Sharplink, was reported to have injected $463 million into the Ethereum ecosystem, acquiring 176,271 ETH, to which over 95% has been staked through liquid staking platforms.
It would seem that ETH worth over $7.3 billion has been staked to secure Ethereum and earn yield since the staking limit was increased. Economically, this has proven to have been a crucial and highly rewarding upgrade. That said, when it comes to governance and the integrity of the network, it's hard to argue if this was the best thing to do.
Moving forward, we'd most likely see ETH earn more institutional capital injection given its position in the ecosystem currently. Real world assets tokenization for instance is going to predominantly happen on Ethereum.
DeFi already mostly thrives on Ethereum, SocialFi, gaming, and almost everything else except memecoins, runs on Ethereum or bridges to Ethereum. This is a great incentive for institutional investors.