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- 1 Since the Shapella Upgrade, the amount of staked ETH has increased significantly.
- 2 For the first time, the deposits on the Ethereum network surpassed the withdrawals.
Ethereum Shapella Upgrade went live on April 12, 2023, and now Ether (ETH) deposits have exceeded withdrawals for the first time. The soft fork allowed the un-staking of ETH staked since the Merge. Glassnode data shows around 4.4 Million coins, worth $22.58 Million, were deposited into staking contracts since the upgrade went live.
Ethereum Shapella Upgrade Starts Bearing Fruits
Analysts argue that this staking influx is coming from large Ether holders or probably Ethereum Whales. Most of them prefer not to liquidate their respective holdings but prefer to earn passive income through staking. Also, this was one of the main motives behind launching the upgrade.
Moreover, this trend is expected to grow eleven more from here on. When deflationary forces are considered, they are expected to push the rally ahead significantly. Interestingly, the demand for staking is increasing despite a waiting time of over a month for retrieving profits from the staked Ether.
Per the data, more than 50,000 individuals are lining up to become validators, with the current annualized yield at staking Ether between 4% to 5%. Ether owners are increasingly trying to establish themselves as network validators.
Staking emerged as a passive investment avenue when Ethereum’s Beacon Chain went live in December 2020. But for three long years, stakers were unable to withdraw the locked coins, exposing them to ether price gyrations. Then came the Shapella Upgrade, de-risking the staking process and allowing users to un-stake the locked coins.
The newly allowed flexibility of withdrawing staked ETH mitigates the perceived risks for multiple investors. Previously, the potential stakers were deterred from staking because the funds would have been locked for a very long time.
However, even if the deposits and staking numbers are increasing, they are still to put a dent in ETH value and fuel the next bull run.
More than 200,000 ETH were deposited on the network this week, per the data from the on-chain analytics tool Nansen. This marks the first time when deposits surpassed withdrawals. Also, the locked ETH for staking increased to around 19 Million units, about 15% of the total Ethereum supply.
The possible reason for this influx other than potential yield opportunities can be cited in the recent meme coin mania. PEPE traders almost strained the Ethereum network, with transactions fees rising to a 12-month high.
More than 6 Million staked ETH is available on Lido Finance, a protocol issuing depositors alternate tokens representing the amount of ETH locked. These alternatives could then be used as liquidity in the decentralized finance (DeFi) ecosystem.
What Will the Ethereum Network Offer Next?
After the Ethereum Shapella Upgrade, the network would bring EIP-4844. This would include a cryptography concept of proto-danksharding, supposedly in Q3 2023. In this upgrade, the data would be managed more efficiently by providing it more pace to move and breaking it into blobs.
It would be followed by Verge, which would introduce Verkle trees, increasing the scalability of the ecosystem. This would allow extensive data storage options, with single or short proof required for data verification making data proof more efficient.
The last upgrade will be the Purge, in which the historical data would be removed. Just like when the old cache memory is removed, the system works faster; this step will remove congestion on the network.
After this upgrade, the Ethereum network could process transactions at the speed of 100,000 Transactions Per Second (TPS); the current rate is around 29 TPS.
Andrew is a blockchain developer who developed his interest in cryptocurrencies while pursuing his post-graduation major in blockchain development. He is a keen observer of details and shares his passion for writing, along with coding. His backend knowledge about blockchain helps him give a unique perspective to his writing skills, and a reliable craft at explaining the concepts such as blockchain programming, languages and token minting. He also frequently shares technical details and performance indicators of ICOs and IDOs.
