The Ethereum (ETH) balance in multiple mainstream centralized exchanges, like Coinbase and Binance, has hit a new low. According to Leon Waidmann on X, over 7 million ETH have been <\/span>withdrawn<\/span><\/a>\u00a0since April 2023.\u00a0<\/span><\/p>\n

Is It DeFi, NFT, Or EigenLayer Sapping ETH From Exchanges?<\/span><\/h2>\n
This decline is net bullish for the coin, possibly hinting that other on-chain activities like non-fungible token (NFT) minting or decentralized finance (DeFi) are taking center stage.\u00a0<\/span><\/p>\n
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Ethereum price trending sideways on the daily chart | Source: ETHUSDT on Binance, TradingView<\/a><\/figcaption><\/figure>\n
Coincidentally, the drop also comes amid the rise of \u201crestaking\u201d enabled by protocols like EigenLayer<\/a>. The platform is garnering interest, sparked by its ongoing airdrop, which is set to incentivize participation.<\/span><\/p>\n
Technically, coin outflow from centralized exchanges is a leading indicator for increasing scarcity and bullish sentiment.\u00a0<\/span><\/p>\n
Users use centralized exchanges like Binance or Coinbase as conduits to either shift to stablecoins or fiat or participate in DeFi or NFT since they can easily purchase coins.\u00a0<\/span><\/p>\n
However, with less ETH readily available on exchanges and on-chain activity rising, the demand for the coin will increase, possibly supporting prices.\u00a0<\/span><\/p>\n
So far, DeFiLlama data\u00a0<\/span>shows<\/span><\/a>\u00a0that the broader DeFi ecosystem is improving as the total locked value (TVL) expands. When writing on February 5, DeFi had a TVL of over $58 billion, up from around $36 billion registered in mid-October 2023. Out of this, Ethereum protocols manage over $32 billion.<\/span><\/p>\n
$\"DeFi$
DeFi TVL | Source: DeFiLlama<\/figcaption><\/figure>\n
Beyond DeFi and NFTs, the contraction in ETH held in exchanges can be attributed to the incentives of EigenLayer and the expected airdrops.<\/span><\/p>\n
EigenLayer Attracts Ethereum Restakers<\/span><\/h2>\n
EigenLayer is a restocking platform allowing ETH stakes in platforms like Rocket Pool, for instance, to \u201cre-stake\u201d and earn additional rewards by securing other protocols. With the promise of more rewards, this offer appears to accelerate the withdrawal of exchanges from centralized exchanges.\u00a0<\/span><\/p>\n
As of February 5, EigenLayer\u00a0<\/span>supports<\/span><\/a>\u00a0restaking staked ETH from over ten protocols, including Swell, Lido, Rocket Pool, Ankr, and Coinbase. The platform also supports Beacon Chain node operators to restake, earning rewards.\u00a0<\/span><\/p>\n
$\"Supported$
Supported ETH liquid restaking platforms | Source: EigenLayer<\/figcaption><\/figure>\n
With EigenLayer restaking popular, it is not immediately clear how the sphere will evolve or how ETH staking will develop.\u00a0<\/span><\/p>\n
However, for benefiting protocols, the idea means they can customize their foundations to not adhere to Ethereum\u2019s strict staking requirements. At the same time, costs will be reduced when launching.\u00a0<\/span><\/p>\n
Though restakers stand to receive more rewards, experts worry that this would overload Ethereum, negatively impacting performance.<\/span><\/p>\n
Feature image from Canva, chart from TradingView<\/p>\n<\/p><\/div>\n