Ethereum’s staking rewards hit a record 8.6% post-Merge, with validators earning $46 million in the first week of May, citing the memecoin craze responsible.
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Validators earned $46 million in the first week of May due to an increase in the staking rewards rate, which is a metric for validators’ annualized yield. According to data, validators earned 24,997 Ether (ETH) in the week, representing a 40% increase over the previous week’s income of $33 million, when 18,339 ETH were distributed as rewards.
The recent trading craze of a new memecoin called Pepe (PEPE) is the reason behind the increased rewards for validators. In the past week, the average fees on the Ethereum network have exceeded 100 gwei, marking the highest level since May 2022. As gas fees increase, end users pay over $30 per swap, resulting in higher fee income for validators from processing transactions and the regular validator rewards.
Beaconcha.in states that the present staking rate signifies the anticipated annualized return for validators. In order to engage in the network’s consensus procedure, validators on Ethereum are mandated to stake a minimum of 32 ETH, valued at roughly $58,000.
There are two types of rewards identified by ETH Store, a company that measures reward rates: consensus rewards for proposing and attesting blocks and transaction fees for processing transactions on the Ethereum network.
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Since Ethereum’s network moved to a proof-of-stake (PoS) consensus mechanism with The Merge last year, and following the recent Shapella upgrade that enabled validator withdrawals for the first time, ETH staking has gained significant importance among institutions.
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