Ethereum Staking Explodes After Pectra—Are We Headed for a Liquidity Squeeze?

Post-Pectra upgrade, Ethereum validators are piling in—staking deposits just hit a 90-day high while exchanges bleed ETH reserves. The smart money’s locking up supply, but will the ETF paper pushers on Wall Street even notice?

Key metrics flashing bullish: Withdrawal queues lengthen as staking yields compress, signaling long-term holder conviction. Meanwhile, the CME’s ETH futures open interest lags spot volume by 37%—classic institutional FOMO waiting to happen.

The real tell? Lido’s stETH premium flipped positive this week after six months in the red. When the crypto-native leverage machine starts humming, you’ll hear the altcoin casino chips clattering.

Post-Pectra Staking Activity Marks Sentiment Shift

According to analyst Kripto Mevsimi, the post-Pectra upgrade period has been marked by a reversal in staking flows. After a brief pullback ahead of the network update, ETH holders appear to be returning to staking, with fresh inflows suggesting renewed interest and confidence in Ethereum’s long-term direction.

Mevsimi’s analysis shows that between November 16 and February 15, before the Pectra upgrade was publicly announced, Ethereum’s total staked supply dropped by over 1 million ETH. This retreat likely reflected investor uncertainty surrounding the update and broader market conditions.

However, from mid-February to mid-May, staked ETH has increased by approximately 627,000 ETH, signaling a return of staking activity following Pectra’s implementation.

The upgrade itself introduced important validator improvements and flexibility enhancements, including EIP-7002, which some analysts believe may pave the way for institutional adoption or potential ETF alignment.

The renewed staking trend, while not yet dramatic in scale, appears to indicate an early phase of repositioning within the Ethereum ecosystem. Mevsimi suggests that this could mark the beginning of institutional preparation or a broader reassessment of Ethereum’s staking value proposition.

With regulatory clarity still developing and macroeconomic uncertainty in play, the future of this trend remains fluid. However, the behavioral pivot post-upgrade may reflect strengthening structural support for Ethereum as a network.

Ethereum Fee Revenue Declines Despite Price Recovery

While staking metrics suggest a shift toward renewed engagement, Ethereum’s on-chain activity presents a more cautious picture. In a separate update, CryptoQuant analyst Carmelo Alemán highlighted a steep drop in the network’s fee revenue.

Data from the Ethereum: fees (Total) metric reveals that daily fees have plummeted from 5,646 ETH on November 13, 2024, to just 292 ETH by May 6, 2025—a 94.82% decline.

This dramatic reduction in fee generation impacts validators directly, as it lowers rewards tied to securing the network. Alemán notes that the decline may also be linked to reduced demand for block space, fewer transactions, or increasing user migration to Layer 2 platforms such as Arbitrum, Optimism, or zkSync, where fees are typically much lower.

The contrast between rising staking activity and declining fee revenue highlights a complex environment in which investors appear confident in Ethereum’s long-term potential despite a near-term slowdown in on-chain engagement.

Featured image created with DALL-E, Chart from TradingView