Author: Cole

Ethereum, a cryptocurrency that was once only circulated within geek circles, is undergoing a profound transformation. It is evolving from a mere cryptocurrency into a "global decentralized computer" that is highly sought after by investors worldwide. At the core of this transformation is the epic reconstruction of Ethereum's token distribution. It is no longer just a game among individual investors; traditional financial giants, publicly listed companies, and various institutions are accelerating their entry, collectively shaping a brand new market landscape.

Currently, Ethereum is experiencing a significant migration of tokens driven by both technological upgrades and the global financial environment. This is not just a matter of numbers increasing or decreasing; it represents a fundamental change in its intrinsic value and market narrative.

01 From "Wild Growth" to "Careful Calculation" in Token Economics

Since its inception in 2015, the economic model of Ethereum's native token, ETH, has undergone a dramatic transformation, evolving from an initially simple and crude inflation model to today's dynamic and complex "elastic supply" mechanism.

Initially, like Bitcoin, Ethereum adopted a "Proof of Work" (PoW) mechanism. Miners would "mine" by consuming large amounts of electricity to earn newly issued ETH as rewards, leading to a continuous increase in ETH supply. Unlike Bitcoin's hard cap of 21 million coins, Ethereum did not set a fixed limit in its early days, raising concerns among investors about long-term inflation risks.

However, the "Merge" upgrade in September 2022 marked Ethereum's official farewell to the high-energy-consuming PoW mechanism, entering the environmentally friendly and efficient "Proof of Stake" (PoS) era. Now, block validation no longer relies on a competition of computing power but is completed by validators who have staked ETH.

More critically, even before the PoS upgrade, the Ethereum community introduced a key proposal known as "EIP-1559." The core mechanism of this proposal is quite ingenious: every transaction incurs a base fee, which is directly burned rather than paid to validators. This means that the supply of ETH is no longer a one-way linear increase. When the network is busy and transaction demand surges, the amount of ETH burned will significantly increase. When the amount of ETH burned exceeds the new ETH issued through staking rewards, the total supply of ETH will experience a net decrease, creating a deflationary effect. This dynamic supply-demand balance directly links the scarcity of ETH to the actual usage rate of the network. A more prosperous and active trading network results in a higher amount of token burn, which in turn enhances its scarcity.

As of the latest data, Ethereum's circulating supply is approximately 120 million ETH. Its market capitalization is currently around $525 billion, firmly holding the second position in the global cryptocurrency market cap rankings, second only to Bitcoin.

This dynamic "elastic supply" model means that the value foundation of ETH is no longer solely based on its status as a native asset but also on its practicality as fuel for the "global decentralized computer." This forms the underlying logic of its token distribution and makes it a unique investment target.

02 Ethereum Token Distribution: The Game of Four Core Forces

To present a clearer picture of Ethereum's token distribution, the following table breaks down the number of ETH controlled by various major holders and their percentage of the total supply. Currently, Ethereum's circulating supply is approximately 120 million ETH.

Ethereum's Current Token Structure

Ethereum's token distribution is not a simple ranking of address balances but a complex system built by multiple functional sectors. Currently, its tokens are mainly concentrated in four core areas: staking networks, DeFi protocols, centralized exchanges, and large institutional holders.

Staking Sector: The New Dominant Force in Token Distribution

With the completion of Ethereum's "Merge," staking has become the most important component of ETH's token distribution. Currently, the number of staked ETH tokens has reached 35.773 million, accounting for approximately 29.64% of its total circulating supply. The total market value of this staked ETH is about $160.26 billion, providing ETH holders with an annualized yield of approximately 1.89%.

However, the centralization issue in the staking market has sparked discussions about the decentralized spirit of the network. Running a complete Ethereum validation node requires a minimum threshold of at least 32 ETH. This high capital requirement makes it impossible for the vast majority of retail investors to participate directly in staking. To address this issue, liquid staking protocols like Lido and centralized exchange staking services have emerged, pooling users' funds to meet the 32 ETH threshold and providing simplified staking services.

This convenience has led to a high concentration of ETH staking tokens. Lido Finance is a leader in this field, with a total locked value on the Ethereum chain reaching $37.5576 billion, making it one of the main participants in the ETH staking sector. Although the ownership of these tokens still belongs to individuals, the concentration of control does pose a potential risk to Ethereum's long-term development.

DeFi Lockup: The Cornerstone of Ecological Prosperity

Ethereum's token distribution is also reflected in its thriving decentralized finance (DeFi) ecosystem. Total Value Locked (TVL) is a key indicator of the health of the DeFi ecosystem, representing the total value of assets locked in decentralized protocols.

Currently, the total TVL on the Ethereum chain is approximately $89.0943 billion, occupying a significant portion of the entire DeFi market. The ETH locked in DeFi protocols is no longer a simple static asset but serves as "productive assets" for lending (like MakerDAO), liquidity provision (like Uniswap), and yield farming. This mechanism endows ETH with new economic properties, positioning it as a core player in the entire Web3 ecosystem. This portion of locked tokens provides critical liquidity and services to the network, serving as an important indicator of the health and attractiveness of the Ethereum ecosystem.

Centralized Exchange Reserves: A Barometer of Market Sentiment

The ETH reserves of centralized exchanges (CEX) are an important indicator of short-term market sentiment and selling pressure. When ETH flows out of exchanges in large quantities, it typically indicates that investors are transferring it to personal wallets for long-term holding or using it for staking and DeFi applications, all of which signal bullish sentiment and intentions for long-term accumulation.

Data shows that ETH outflows from centralized exchanges are at historical highs. For example, between August 23 and 27, 2025, Binance's ETH reserves decreased by about 10% in less than a week, from 4.975 million ETH to 4.478 million ETH. This ongoing outflow trend indicates that the market structure is shifting from short-term speculation to long-term holding, which is a positive signal for ETH's price stability and future growth.

Large Institutional Holders: The Rise of New "Whales"

The U.S. Securities and Exchange Commission (SEC) has approved nine issuers to launch spot Ethereum ETFs, including top global asset management firms like BlackRock, Grayscale, and Fidelity. This event is a decisive moment in the "financialization" process of Ethereum. It provides unprecedented and convenient investment channels for traditional finance (TradFi) globally, transforming ETH from an asset primarily held by native crypto investors into an investment product that can be widely accessed.

The speed and scale of BlackRock's entry are remarkable. According to relevant data, as of September 2, 2025, BlackRock has held over 3 million ETH through its spot Ethereum ETF (ETHA), with a total value of approximately $12.9 billion. This holding accounts for about 2.5% of the global circulating supply, officially elevating it to the status of an Ethereum "whale." BlackRock's rapid accumulation demonstrates that the entry of traditional capital will have a profound impact on ETH's token distribution.

In addition to traditional financial giants, some publicly listed companies are also adopting Ethereum as their core reserve asset. For example, cryptocurrency mining company BitMine has transformed into a company centered around Ethereum as its core reserve asset. The company currently holds 1.86 million ETH, with a total value of approximately $8 billion, making it one of the largest corporate ETH holders globally.

03 Summary

Currently, Ethereum's token distribution is forming a complex new pattern shaped by four forces.

First, the high concentration of staking pools and the active DeFi ecosystem act like two massive reservoirs, locking up nearly half of the circulating ETH supply, significantly reducing the tradable tokens in the market. This locked ETH has transformed from a mere "digital asset" into a "productive asset" that generates returns, providing a solid foundation for Ethereum's long-term value.

At the same time, the continuous shrinkage of centralized exchange reserves indicates that market sentiment is shifting from short-term speculation to long-term holding. Investors are no longer eager to buy and sell on exchanges but are transferring assets to personal wallets or long-term staking, which is undoubtedly a positive sign of market maturity.

Finally, the accelerated entry of traditional financial giants and large whales through ETFs and over-the-counter (OTC) trading is continuously consuming the already scarce freely circulating tokens in the market.

The combined effect of these multiple forces is creating a potential "supply shock," where the amount of ETH available for trading is decreasing while demand continues to grow. This shift suggests that Ethereum's value will no longer be determined solely by technological innovation but will also be jointly determined by its increasingly solid token structure and the growing institutional support.

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