Ethereum’s “Shapella” upgrade enables users to withdraw staked ETH. The hard fork also introduces network improvements, making staking more attractive for investors and developers.
ETH Stakers Rejoicing as Shapella Allows for Withdrawals and More
The Ethereum blockchain has undergone a significant upgrade known as the Shanghai hard fork. At approximately 22:27 UTC, the upgrade was initiated and finalized around 15 minutes later at 22:42 UTC. This historic milestone completes Ethereum’s multi-year transition to an entire proof-of-stake network.
In a proof-of-stake system, users stake cryptocurrency as a guarantee to help secure and confirm new data blocks. Before this upgrade, users could not withdraw their staked ether or redeem accrued rewards, a crucial feature of the new paradigm.
The price of ETH mainly remained unchanged when the Shanghai hard fork was triggered. Meanwhile, about 4000 people tuned in to a Shapella Mainnet Watch Party hosted by Ethereum Cat Herders. During the live stream, Vitalik Buterin, the co-founder of the Ethereum blockchain, explained that the most complex and fastest parts of the Ethereum protocol’s transition were over, and essential things still needed to be done, but at a slower pace.
Buterin emphasized that scaling, making transactions faster and cheaper, will be the next issue the blockchain will tackle after the Shanghai upgrade. He stated that if scaling is fixed before the next bull run, people can pay $500 for transactions. On the other hand, if Verkle Trees aren’t implemented before the next bull run, it won’t be as big of a problem as $500 transactions.
Ethereum Community on High Alert for Potential Sell Pressure
The Ethereum community is concerned about the possibility of sell pressure due to unlocking over 1.1 million accrued ETH rewards from the Beacon Chain, which went live in December 2020. This represents approximately 15% of the total ETH supply staked on the network.
Many market analysts have speculated that this could trigger a rush of stakers looking to liquidate their tokens, leading to significant selling pressure. Moreover, reports have emerged that entities facing financial difficulties may also look to sell their staked ETH balances.
Despite these concerns, some market analysts believe that ETH’s selling pressure will likely be distributed over several days due to the withdrawal queue, giving buyers a chance to watch and analyze the market before making any moves.
Final Thoughts
For months, digital-asset market analysts have speculated whether the Shanghai hard fork would catalyze a price rally or a crash. Nonetheless, it remains to be seen how this situation will play out and how it will affect the value of ETH.