ETH stakers may consider sticking to their safety nets despite 5.5% APR jump

ambcrypto.com:

Since the completion of the Ethereum Merge, sentiment within the community has remained positive, especially for stakers. These cohorts finally witnessed some bullish scenario(s) in their annual percentage rate (APR) earned by staking ETH post the Merge.

However, could the peg between stETH and ETH see a constant incline or can history repeat itself?

Ethereum recently revamped its protocol from a proof-of-work to a proof-of-stake model. And, one of the biggest post-Merge takeaways stands to be the pool of rewards for validators that saw a significant increase.

Since the Merge, stETH has gradually returned to par with ETH after spending almost four months trading below the peg. Simultaneously, Lido staking APR increased from 3.85% to 5.52%. It has remained at elevated levels since.

Herein, Lido Staked ETH or stETH is a liquid, ERC-20 token that represents ETH staked with Lido.

Source: Delphi Digital

All stETH tokens would be redeemable for ETH on a 1:1 basis when a future upgrade to Ethereum, dubbed the Shanghai upgrade, enables withdrawals of staked ETH. This has been tentatively scheduled for 2023.

This future redemption mechanism pegs the current value of stETH to ETH on a 1:1 basis. However, the peg broke in May 2022 with stETH trading as low as 0.93 per ETH on 20 June. Nonetheless, the success of the Merge improved market confidence in stETH. Ergo, it caused the peg to return to par with ETH.

To support the aforementioned information, on-chain analytics startup Nansen reported massive inflows into staked Ether tokens following the Merge. For instance, staked Ether (ETH) tokens like Lido’s stETH enjoyed inflows of over $33 million in the seven days following the Merge.

Talking about numbers, the market cap of all staked