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As a result of the increased activity on Ethereum in recent weeks, fewer ether tokens were issued as validator incentives and more tokens were burned as transaction fees.
Ethereum staking rewards have seen a boost in the last few weeks, with validators now receiving higher transaction fees as a result of network activity.
According to DeFi researcher Mika Honkasalo, the seven-day moving average for annualized staking rewards on stETH, a liquid staking token backed by Ethereum (Ether), has climbed to 5.5%. This is up from just 3.5% in September, according to data from Lido Finance.
An increase in the network activity, notably in ways that result in greater fees for network validators, has been highlighted as the primary reason for the rising yield. In particular, MEV activity, where bots initiate transactions on the blockchain, has increased, Honkasalo said.
APRs have risen as high as 11% for individuals that leverage their staking earnings through offerings like icETH or ETHMAXI. In this scenario, the tokens are used to borrow more tokens, and all of them are staked, increasing the yield.
Honkasalo added that there has been a rise in the trade of altcoins on Uniswap recently including Shiba Inu and DAI. This has been spearheaded by Protocol, a parody token that was established in response to a recent tweet by Ethereum co-founder Vitalik Buterin.
As a result of the increased activity on Ethereum in recent weeks, fewer Ether tokens were issued as validator incentives and more tokens were burned as transaction fees. Anthony Sassano, a co-founder of EthHub, took to Twitter to say that the burning process has balanced out the issuance and that the quantity of ether has not increased during the past 30 days.
Earlier this week, the Ethereum Foundation announced that its core developers are shifting their focus to the network’s next, highly anticipated upgrade: Shanghai.
The network will initially launch a “Shandong” testnet that will act as a testing ground for several Ethereum Improvement Proposals (EIPs), which Ethereum’s core developers will create, adjust, and eventually narrow down to the select number of changes that will be included in Shanghai when it goes live.
Although a formal launch date has not yet been agreed upon among Ethereum’s core developers, they have previously told reporters that Shanghai is anticipated to start by September 2023 at the latest.