Ethereum On-Chain Data Suggests Upcoming Shanghai Upgrade Won’t Cause ETH Selling Pressure
As the March 2023 Ethereum Shanghai hard fork looms, traders are speculating that this could lead to a sharp selloff in Ether. However, a recent report from Binance suggests that on-chain data does not support this prediction.
This upgrade will be the final phase of the network’s transition from proof-of-work to proof-of-stake, starting with the merge on September 15, 2022. After the Shanghai upgrade is implemented, previously locked-up Ether will gradually become liquid for the first time from December 2020. Over 16.6 million ETH are currently locked in the proof-of-stake protocol, worth $28 billion as of February 16, 2023.
On-chain Etherscan data shows that the Liquid Staking Derivatives (LSD) protocol charges a fee and locks up native ether, allowing users to profit from staked ether while maintaining the ability to sell derivative tokens on secondary markets. As of February 13, 57% of the stashed ether was liquid, while 43% was illiquid, with most of the stashed ether achieved via LSD. This means that investors now have access to liquidity, which may reduce the selling pressure after Shanghai.
While some traders predicted that Ethereum price could drop sharply after Shanghai, the data suggests that existing profitable minority shareholders may be firm believers in the Ethereum network, as the liquidity date at that time is still unknown. Was. With a large number of bettors at a loss and those at a profit likely to be long-term investors, the price of Ether may not see a significant drop when the token is able to unstake.
Lido is now the largest staking entity in Ether, accounting for 29.2% of all entities with more than 5 billion ETH staked. Solo stakers running nodes currently represent 24.9% of all stakers. With approximately 55% of staked Ether held by independent stakers or lidos, the risk of an Ether price crash may be low.
Ethereum’s transition from proof-of-work to proof-of-stake is beginning to achieve its original goals, even with a deflationary supply of ether. Over 24,800 ETH were destroyed within 154 days of the merger, a coin deflation of 0.05% per year. On February 16, the total supply of Ether was 120 million, meaning a little over 10% of the supply would be unlocked, and rewards would begin with the Shanghai update.
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