‘Shapella Upgrade Could Generate Institutional Interest in Ethereum’

The highly anticipated Shapella upgrade for Ethereum is here today. After the update, stakers will finally be able to unstake their Ethereum from the blockchain’s Proof-of-Stake contract. To this day that was not possible and there are 18 million Ethers tied up in the smart contract of the Beacon Chain.

Renewed institutional interest

The Proof-of-Stake contract for the new Ethereum blockchain has been open since November 2020, so there are people who have not been able to sell their tokens since then. That is set to change soon and some say it could rekindle institutional interest in Ethereum.

Institutional investors are the big boys of the market, who like to work with a certain degree of certainty. They want to be able to guarantee at certain times that their customers will have access to their capital again, which was not possible until now with the new Ethereum Proof-of-Stake blockchain.

β€œThe lack of liquidity on Staked Ethereum is something investors want resolved as the final phase of the transition from Proof-of-Work to Proof-of-Stake. It made it easier for the big boys to get in. From then on, it will be easier to offer these products to the market because they can provide certainty about liquidity in terms of timing,” said Ether Capital CEO Brian Mosoff.

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After the Shapella upgrade, parties that want to offer this product to their wealthy customers can tell exactly when the customers in question can withdraw their Ethers again and possibly sell them if they are interested. This makes it easier to calculate with Ethereum and that may make it more interesting for this group to strike.

No volatility expected

In terms of volatility, Mosoff expects things to be okay with the Shapella upgrade. In the long term, he expects it to be bullish for Ethereum, but in the short term, he qualifies it as a non-event. Although we have of course seen crazier things in the crypto market. An increase or decrease cannot be ruled out in advance.

MetaMask’s institutional head, Johann Bornman, told Blockworks that he thinks Shapella is a huge milestone for the crypto world. β€œWe are really seeing a shift from institutional investors increasingly interested in staking, particularly over the past six months,” said Bornman.

So there is certainly hope and confidence from the industry that Shapella will prove to be an important development for Ethereum. Ultimately, only time will tell, but sentiment is more than positive about the upgrade at the moment.

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