By George Ward
In the first week of May, Ethereum validators experienced a surge in staking rewards rate, leading to a notable rise in their earnings, which rose to $46 million. The validators’ annualized yield, measured by this metric, saw a significant increase, resulting in them earning 24,997 Ether (equivalent to $1,852) for the week.
This marks a substantial 40% surge in income compared to the previous week when validators received $33 million in rewards, distributed as 18,339 ETH.
The PEPE Coin Connection
Validators have witnessed a rewarding surge attributed to the recent trading frenzy of a new memecoin, Pepe (PEPE). Over the last seven days, there has been a significant surge in the average fees charged on the Ethereum network, with a remarkable peak above 100 gwei.
This threshold has yet to be witnessed since May 2022. With such an increase in gas fees, the end-users must pay more than $30 for every swap they carry out.
This leads to validators earning substantial fee income from processing transactions in addition to their usual validator rewards. According to Beaconcha, the current staking rate represents the expected annualized return for validators participating in Ethereum’s consensus mechanism.
Validators must stake at least 32 ETH, approximately $58,000 in fiat, to participate. Meanwhile, ETH Store, a platform that tracks reward rates, has identified two rewards associated with the Ethereum network.
The first is consensus rewards, which are received for proposing and attesting blocks. The second is transaction fees, which are earned for processing transactions on the network.
After transitioning to the proof-of-stake (PoS) consensus mechanism through the Merge in 2022, the recent Shapella upgrade has allowed validators to withdraw their stakings. For the first time, Ethereum’s network has witnessed a substantial increase in institutional interest in ETH staking.
PayPal Has $362 Million Worth of ETH Holdings
In its recent quarterly report submitted to the US Securities and Exchange Commission (SEC), digital payment platform PayPal disclosed its cryptocurrency holdings for Q1 of 2023. Based on its filings, PayPal claimed ownership of virtual assets worth $943 million as of March 31, 2023.
This reveals a substantial increase of 56% compared to the previous quarter, where the company disclosed $604 million in crypto assets. PayPal’s total financial liabilities reported this quarter is $1.2 billion, and crypto assets accounted for 77.9%, representing a rise of over 10% from the liabilities reported in the fourth quarter of 2022.
The report disclosed that PayPal sees its crypto holdings as a “safeguarding liability” in light of the high risks associated with virtual currencies. Furthermore, the disclosure shows that the company’s cryptocurrency portfolio has remained unchanged since the last quarter of 2022.
As stated in last quarter’s filing, PayPal’s customers entrust their assets to third-party holding companies, which limits PayPal’s custody over these assets. While PayPal acknowledges that this arrangement poses a risk to its customers if third-party companies fail to execute transactions, the firm disclosed that it has not yet encountered such a scenario.
Furthermore, a breakdown of PayPal’s crypto holdings for Q1 of 2023 shows its Bitcoin holdings as $499 million, Ethereum as $362 million, while Bitcoin Cash and Litecoin make up the remaining $82 million. Meanwhile, observers noted that PayPal’s inclusion of crypto as part of its holdings has contributed to its profitability in the first quarter of the year.