Cryptocurrency exchange Coinbase has lost market share in its burgeoning Ether (ETH) staking business as mounting pressure from U.S. regulators weighs on its staking service.
According to one source, the exchange’s share of ETH staking fell to 9.7%, the lowest level since May 2021. dune analysis chart By 21Shares, a digital asset investment product issuer. This is down significantly from the 13.6% recorded on April 12, when Ethereum’s Shanghai upgrade made withdrawals possible for the first time.
The recession was driven by a surge in demand for ETH staking (locking up tokens to participate in blockchain security protection while earning passive income from holdings).Shanghai upgrade sparked wave of deposits into staking, with inflows outpacing withdrawals for some investors 3.5 million Ethereumworth $7.3 billion at current prices.
However, Coinbase experienced a net outflow of $517 million (272,315 ETH) during the same period, making it the second-largest after rival cryptocurrency exchange Kraken.
“A potential reason could be that investors do not want to expose themselves to regulatory risk by using Coinbase’s staking service,” 21Shares analyst Tom Wang said in a note. told Coindesk inside.
The Kraken has been sued by the U.S. Securities and Exchange Commission (SEC) suspended its staking service for U.S. customers earlier this year as part of a settlement with its agency.
On June 6, the SEC also filed a lawsuit against Coinbase for violating federal securities laws, including offering unregistered securities to users on its staking service. However, the exchange said it remains committed to maintaining its staking service.
Since the lawsuit, Coinbase has withdrawn about 149,300 ETH from Ethereum’s proof-of-stake network, but deposited just 52,992 tokens. blockchain data Edited by 21Shares show. A net outflow of $183 million indicates that users were unstaking their tokens and fleeing the exchange.
Coinbase remains the second largest staking service provider, but fast-growing rivals such as Figment, RocketPool and Kiln are closing the gap. dune chart indicates
replacement takes time 25% commission A decrease in the amount of staked tokens means a decrease in revenue as it is paid based on user rewards earned through staking.