The most anticipated Ethereum upgrade, the Shanghai upgrade, is projected to be a hard fork scheduled for April 12, 2023. A combination of the words “Shanghai” and “Capella,” two of the planned Ethereum Improvement Proposals, is the phrase “Shapella“. Given that staked Ether represents around 16 million coins, or almost a sixth of the token’s total supply, as of this update, there are significant ramifications.
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Main Feature of the Shapella
The EIP-4895 is thought to be the primary component of the much anticipated Shapella upgrade. Users will be able to withdraw their staked Ether, or tokens invested to support a blockchain’s operations, in exchange for a passive income, typically in the form of additional tokens.
Given that around 18 million Ether, or 15% of the total supply, are staked into the network according to the Etherscan statistics, there are now worries that holders would sell their Ether quickly in order to lock in profits. Prices may decrease if the dreaded scenario actually materializes.
Shapella’s Perceived Benefits
According to Zhuling Chen, CEO of cryptocurrency staking service provider RockX, there will likely be some short-term market turbulence following the Shapella change. He has also made clear that he prefers to concentrate on the “substantial” long-term advantages of the Ethereum network.
He further argued that the staking landscape will change and Ethereum will become the benchmark yield for cryptocurrencies in which he claimed that “Ethereum’s capacity to handle more transactions per second increases, transaction costs decrease, and the security and efficiency of smart contracts improve.”
On the other hand, according to reports, P2P.org CEO Alex Esin anticipates a significant increase in staking activity in the year following the Shanghai upgrade. He said that after this functionality goes live, they may not necessarily expect significant unstaking.
As the CEO of the cryptocurrency financial service Flowdesk, Guilhem Chaumont has concentrated on the idea that the method for withdrawing staked Ether might stop a token sell-off on its own.
In which he asserted in a paper sent through email that it’s crucial to understand that the withdrawal queue only permits a specific number of requests each day. Unstaking is not expected to result in a rapid, sudden dip, he continued, indicating that there may be continued downward pressure on the market.
According to Brian Mosoff, CEO of the technology startup Ether Capital, trading for Ethereum could take on a new look in the coming months. He continued by saying that single stakers are likely to lock up more ETH for staking.
As more structured items hit the market, he is also looking. It is believed that Ethereum’s final step in completely implementing its proof-of-stake consensus mechanism is the Shapella update.