- Ethereum network’s Shapella upgrade will transform the liquid staking landscape forever, making ETH the benchmark yield for crypto.
- Lowering of gas fees for developers and increase in popularity of liquid staking derivatives is expected to drive ETH adoption higher.
- Nearly 85% of Ethereum holders expect more ETH to be staked within the next three months, driving away fears of massive selling pressure on the altcoin.
Ethereum blockchain’s Shanghai upgrade is slated to occur on April 12. This marks the second-most significant milestone in Ethereum’s developmental journey post the Merge, the transition from Proof-of-Work.
Liquid staking derivatives have gained traction in the weeks leading up to the Merge.
Also read: Ethereum stakers are underwater with Shanghai hard fork drawing close
Ethereum Shapella upgrade run down
Ethereum Shapella upgrade, known as Shanghai, is a hard fork scheduled for April 12, 2023. The upgrade lines up a series of improvements in the Ethereum blockchain, including the proposed Ethereum Improvement Proposals (EIPs) Shanghai and Capella.
In addition to token withdrawals, the upgrade reduces gas fees for Ethereum network developers. The Shanghai upgrade has bundled five different EIPs, EIP 3651, 3855, 3860, 4895 and 6049.
These Ethereum Improvement Proposals address scalability issues, transaction fees and token withdrawal related developments on the blockchain. Capella upgrade tackles full and partial withdrawals for the network’s validators.
What Ethereum holders need to do?
Ethereum holders and users don’t need to take any additional steps if they use an exchange, digital or hardware wallet unless specified by wallet providers.
What happens if stakers or node operators do not participate in the upgrade?
Ethereum clients that fail to update to the latest versions will sync to pre-fork blockchain once the upgrade is complete. This implies that the operator will be stuck on an incompatible chain and unable to operate on the post-Shanghai blockchain network. Therefore it is essential that operators participate in the upgrade.
What ETH holder community expects
On Crypto Twitter, Ethereum believers, a group referred to as “ETH Maxis,” analysts and developers have presented different scenarios for ETH post the hard fork. Experts believe ETH token unlock could result in temporary selling pressure on the altcoin, however a large percentage of staked ETH may hit liquid staking projects or line up for staking elsewhere given the price of the altcoin, and holders being underwater at the time of unlock.
Another scenario stems from the front-running of the Shapella upgrade and Ethereum’s recent price rally to the 2023 high above $1,900. It is likely that the ETH upgrade is priced in and the token unlock turns out to be a non-event or has less of a bearish impact than anticipated previously by the community.
More Ethereum to be staked within the next three months: 83% ETH holders
In a recent survey conducted by OKX exchange, 83% of ETH community members/ respondents expressed optimism about a spike in Ethereum staking within the next three months.
Following are the key findings of the survey:
Key findings of the OKX survey
While the token unlock is going live for the first time since the launch of the Beacon Chain contract in 2020, ETH holders are convinced that more tokens will be staked within the next three months, supporting a bullish thesis for the asset in the medium-term.
How Ethereum's upgrade could be a deciding moment for crypto traders
Crypto traders that suffered a setback in the tumultuous events in cryptocurrency markets could take ETH token unlock as the first opportunity to exit from digital assets. Holders with an appetite for risk could continue holding or staking their ETH in anticipation of rewards in the future. These two possibilities make it a deciding moment for crypto and it remains to be seen how ETH holders react post token unlock. There is a likelihood of glitches in the upgrade's implementations and ETH token unlock, this is another factor that could influence digital asset traders.
Experts criticize Ethereum for scalability issues
YavuzAyral, a crypto analyst and expert believes that focusing on Ethereum limits the innovation in the cryptocurrency industry. Several Layer 2 solutions are working on tackling Ethereum’s issues, despite that there is uncertainty in the ETH ecosystem.
Focusing this much on Ethereum limits innovation in the whole crypto space.
— Emir (@YavuzAyral) April 7, 2023
How many more L2s do we need to fix Ethereum’s issues? Do they fix a problem or bring more uncertainty for the future?
There are better blockchains out there for developers to build better products.
The expert criticizes developers for building more solutions to scale Ethereum and calls for innovation on other blockchains where scalability is not an issue.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended Content
Editors’ Picks
Is Altcoin Season here as Bitcoin reaches a new all-time high?
Bitcoin reaches a new all-time high of $98,384 on Thursday, with altcoins following the suit. Reports highlight that the recent surge in altcoins was fueled by the victory of crypto-friendly candidate Donal Trump in the US presidential election.
Shanghai court confirms legal recognition of crypto ownership
A Shanghai court has confirmed that owning digital assets, including Bitcoin, is legal under Chinese law. Judge Sun Jie of the Shanghai Songjiang People’s Court shared this opinion through the WeChat account of the Shanghai High People’s Court.
BTC hits an all-time high above $97,850, inches away from the $100K mark
Bitcoin hit a new all-time high of $97,852 on Thursday, and the technical outlook suggests a possible continuation of the rally to $100,000. BTC futures have surged past the $100,000 price mark on Deribit, and Lookonchain data shows whales are accumulating.
Shiba Inu holders withdraw 1.67 trillion SHIB tokens from exchange
Shiba Inu trades slightly higher, around $0.000024, on Thursday after declining more than 5% the previous week. SHIB’s on-chain metrics project a bullish outlook as holders accumulate recent dips, and dormant wallets are on the move, all pointing to a recovery in the cards.
Bitcoin: New high of $100K or correction to $78K?
Bitcoin surged to a new all-time high of $93,265 in the first half of the week, followed by a slight decline in the latter half. Reports highlight that Bitcoin’s current level is still not overvalued and could target levels above $100,000 in the coming weeks.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.