$120 Billion in Staked ETH Hides Reality of Ethereum Supply

Ethereum's institutional data hub reported significant growth in layer-2 (L2) networks and staking, but this does not necessarily translate to fresh demand for Ethereum. According to a snapshot on September 21, there was $120 billion in staked ETH and $40.4 billion in daily average total value locked on L2 networks.

Staking involves depositing ETH to activate validators, which help secure the network and earn rewards. However, this does not necessarily mean that investors are purchasing new ETH; they could be using existing holdings for staking purposes.

The growth in L2 assets is also a separate measurement from Ethereum holders' demand. These networks pay fees to Ethereum operators for services such as transaction data, proofs, and state updates. The costs differ from the fees users pay directly to an L2, and blob spending alone does not represent the whole settlement bill.

In fact, ETF flows also cannot settle the question of total ETH demand, as they only describe movements through those funds. US-traded Ethereum ETF sessions saw over $140 million in net outflows from September 15 to 18.