Tomorrow the long-awaited Shapella update of Ethereum (ETH) is scheduled. Among other things, the update will make it possible to include staked ether. A whopping 18.1 million ETH is currently tied up in staking contracts. With the update, this will become liquid in phases, possibly generating a lot of downward pressure on the price. Or not?
Just more ETH strikers after update?
The more than 18 million Ethereum tokens have a combined value of almost USD 35 billion at the time of writing. Concerns have been raised that some of these tokens may be sold by strikers who want their money’s worth after years of waiting.
However, if it is up to Ether Capital CEO Brian Mosoff, the update will not negatively affect Ethereum’s price. He expects new capital to flow in after the update: “I expect more ETH to be locked up, either through solo strikers or through more structured products,” Masoff says in an interview with the crypto news platform Coindesk.
The withdrawal feature, according to Masoff, will lower the threshold for traditional financial institutions to invest in Ethereum. Currently, crypto is still a big step for many institutions. ‘Liquid’ staking options will most likely make Ethereum more attractive as an investment product.
The last big step for Ethereum
The Shapella update is the last major step in the transition of the Ethereum network to a proof-of-stake system. The Merge took place last September. Ethereum moved from a proof-of-work system to one where stakers jointly validate transactions.
Once withdrawals of staked ETH are possible, the transition can be considered fully completed. In addition to the recordings, the update will also contain other improvements. This will also boost the scalability of the network. Transaction costs will be lower and the network will be able to process transactions faster after the update is completed.