Introduction

In this post, we will take a deep dive into the Ethereum network during the month of March 2023. Our goal is to provide a comprehensive analysis of the network and its various components. Here are the topics we explore:

All the data was sourced from our own validators, beaconcha.in and rated.network. We considered only staking providers whose information is publicly available, meaning this list isn’t a complete picture of the Ethereum staking ecosystem.

Network Overview

As of March 2023, the total amount of Ethereum staked has reached 17,963,528 ETH, which is 5.26% higher than the previous month's total stake. This is a significant increase, demonstrating the growing interest in Ethereum staking. The amount staked now represents approximately 15.04% of the total circulating supply of Ethereum, which is a strong indication of the confidence that investors have in the platform. It is worth noting that this is a considerable increase from just a few months ago, demonstrating the rapid growth of the Ethereum ecosystem.

Despite the increase in the total amount of Ethereum staked, the current network-wide average annual percentage rate (APR) for Ethereum staking is around 4.1**%**, which is a 0.0738 percentage point increase from the previous month. The consensus rewards have increased by 0.2518 points, but the execution rewards have decreased by 0.178 points due to the increase in the number of validators in the network. The table below shows the top 5 block MEV rewards.

For investors interested in Ethereum staking, it is important to be aware and understand the risks involved. Additionally, during March, 4 validators from the network were slashed, one of which belongs to Rocket Pool

This highlights the risks involved in Ethereum staking and the importance of carefully selecting validators to stake with.

Staking review by segment

The upcoming Shanghai update for Ethereum, scheduled for April 12, has holders of liquid staking tokens eagerly anticipating how the event will impact their holdings. Prior to the update, any ETH deposits into these protocols could not be withdrawn from Ethereum's deposit-only Proof-of-Stake (PoS) system. After the Shanghai event, users will be able to unstake their ETH, sell their stakes, or migrate to a different staking service.

For the current period, liquid staking increased to a total of 33.33%. This value is 2.38 points higher than at the beginning of the year. Conversely, CEX stacking has decreased to 27.27%, which is 2.31 points lower than at the beginning of the year. Staking pools and unidentified validators have remained almost unchanged, at 16.97% and 22.43% respectively. As we can see, at the end of February there was a big amount of ETH deposited, one of them is the largest single daily inflow ever on the Lido platform in the amount of 150,000 ETH.

Lido is the largest liquid staking platform, which currently has over 31% of all staked ETH. Lido's popularity can be attributed to its ease of use and its ability to provide users with a flexible and secure way to stake their ETH. It is challenging to de-anonymize all validators, including their owners and whether they belong to centralized exchanges, staking pools or e.t.c. However, with Lido, all the information about the validators is public.

Lido operators

When it comes to ETH staking we should not only consider the APR as an important metric but also take into account validator effectiveness, which can be an even more accurate metric. Validator effectiveness indicates how much of your validator balance is being used for attestations, and is calculated as the effective balance as a fraction of the total balance. P2P.org published an article explaining why validator effectiveness is a better metric than APR, and providing tips on how to choose the best staking operator.

In this regard, two of the highest-performing validators in the market are Allnodes and Attestant. These validators have an effectiveness rating of 97.25%, which means they are highly efficient in terms of attestation.

The top 3 by validator effectiveness is P2P.org with the highest APR in the top 5 effectiveness rating over the last 30 days. We will explore this in more detail in the next section.

We would also like to note that Staking Facilities and Everstake had the highest APR in March. Staking Facilities has an APR of 9.96%, with an execution APR of 6.07%. This value is approximately 50% higher than their average APR, due to a very large MEV block reward of around 692 ETH for block 16867030.

P2P.org overview

The top 3 by validator effectiveness is P2P.org with the highest APR in the top 5 effectiveness rating over the last 30 days.

Rewards

For March, all active validators on the network generated a mean rewards rate of 0.1345 ETH. The average reward of P2P’s validators was 0.1386 ETH, around 3% higher than the mean performance of all the active validators on the network

This is mostly due to P2P's enterprise-grade infrastructure, which maximizes node uptime and rewards, while also utilizing MEV-Boost to extract additional value during block production.

Consensus performance

The primary metric commonly used when choosing a staking provider is APR. However, due to Ethereum’s complex rewards structure, it’s better to compare staking providers by their validator’s effectiveness rather than APR. We conducted extensive research on the topic, and you can read about it here.

Earned

Validators may receive fewer consensus rewards due to missed attestations and errors that result in penalties. Here, we compare the average share of rewards of the network and P2P.org.

The network average share of consensus layer rewards was 98.29%, while that of P2P.org is 99.18%, which is 0.89 percentage points above the network average

Attestation rate & correctness

The attestation rate measures how often a validator successfully attests new proposed blocks to the rest of the network. If a validator is down or cannot attest blocks for other reasons, its attestation rate and, therefore, rewards will decrease. Attestation correctness is another essential metric to consider, as it measures the accuracy of a validator's attestation. Validators must attest to the correct block or face penalties, including potential slashing. Accurate attestations are crucial for maintaining the integrity and security of the Ethereum network, making attestation correctness an essential metric to consider.

In March, the network's average attestation rate was approximately 99.6%, while P2P's attestation rate was 99.98%, which is 0.38% higher than the network average. The network's average attestation correctness was approximately 98.91%. Meanwhile, P2P's attestation rate was 99.36%, which is 0.45% higher than the network average.

Execution performance

The execution layer is the layer on the Ethereum blockchain that provides the environment for applications and smart contracts to operate and process transactions within and between applications. In general, there are two types of execution layer rewards: transaction priority tips and MEV tips.

There is a high risk of missing a block when the MEV relay proposes it for an extended period of time. Therefore, we create the block ourselves, which is why we haven't achieved 100% success rate. In March 2023, P2P.org had 96.4% of the MEV blocks, with 3052 proposed blocks and a proposal rate of 99.97%. Here are the top 5 blocks with the highest MEV rewards:

Slashing

A slashing event occurs when a validator misbehaves on the network. This is the most severe penalty a validator can suffer, and it results in the loss of a portion of their staked tokens.

During March, P2P had no slashing occurrences. We are proud to maintain a flawless record of zero slashing events throughout our time running Ethereum validators.

P2P operates validator infrastructure securely, to minimize the risk of being slashed, and provides coverage to mitigate any losses in the event of a slashing incident.

Tweets and articles of the month

Check out P2P.org best tweets and articles for March 2023

A deep dive into withdrawals. What will the post-Shapella market look like? We researched the market landscape and withdrawal documentation comprehensively to highlight the pitfalls and insights about the upcoming changes. Read the Twitter thread and check the full post here
Choosing the best validator. Dive into our ultimate guide on choosing the best Ethereum validator for the Shanghai update Metrics, slashing insurance, SLA & more. Read article
Calculate possible APR. Ethereum APR is highly influenced by random factors like the number of blocks created or MEV. But how do you know if your APR is good or not? We've developed an advanced APR simulator, that calculates the average expected APR and possible deviations. Try it out