Staking and the Shanghai upgrade: What expect from Ethereum?
Staking has become the primary way to earn profitability for validation and network support since Ethereum switched to a Proof-of-Stake consensus mechanism. The Shanghai update, which will allow users to withdraw their staked ETH, is scheduled to be released in March 2023.
In this idea, we will look at the current state of staking and what to expect in the nearest future.
The main disadvantages of native staking are as follows:
To address these concerns, liquid staking protocols have emerged on the market. We will go over these in details below.
According to PnL Staker Data, 66.5% of stakers are currently losing money because the price of ETH when they staked it was higher than the current price. The highest peak of staking for users at a loss occurred in the $2500-$3500 price range. Given the minimum staking size of 32 ETH, these users have suffered significant losses, and many may choose to withdraw their ineffective staked ETH to minimize or avoid these losses.
There are currently 500,000 active validators working on Ethereum, and the total staked balance is 16 million ETH (13% of the total supply of ETH), with one validator's average balance being around 34 ETH.
Some key takeaways from this information are:
So, what can we expect from Ethereum in the future? Based on current market conditions, the Federal Reserve's softer rhetoric, positive CPI data, and a negative news agenda leading up to March 2023 (when the final damages from the FTX collapse will be assessed and Mt. Gox users will receive their payments), Ethereum, like the rest of the market, is likely to experience local growth until March.
However, we are likely to see a market decline around March 10-20, which will be influenced by the Shanghai update. The 8-10 days required to restore capital efficiency for Ethereum stakeholders will put downward pressure on the price.
If the overall market is positive and investors are willing to buy, we can anticipate further growth following this period of decline. On the other hand, if the market is more negative and traders are driven by greed, we may see cascading liquidations and a new fall in the market.
Write in a comment section your opinion whether it will be a further growth or a new fall in the market and also share with us please your thoughts about our ideas. We are a fast-growing derivative exchange and we would like to share our ideas and provide society with a high-quality information to read and to talk about. So that's why we need feedback from you. Check our previous ideas and thanks for your time!
In this idea, we will look at the current state of staking and what to expect in the nearest future.
The main disadvantages of native staking are as follows:
- While your Ethereum is staked, you must keep it locked up and cannot use it for anything else;
- Staking is inefficient in terms of capital usage because the staking fee is only calculated on 32 locked ETH. This means that if you stake 32 ETH and grow it up to 34 ETH with rewards, the rewards will only be applied to the original 32 ETH. This renders a portion of your capital ineffective;
- You cannot withdraw your ETH until the Shanghai update is released.
To address these concerns, liquid staking protocols have emerged on the market. We will go over these in details below.
According to PnL Staker Data, 66.5% of stakers are currently losing money because the price of ETH when they staked it was higher than the current price. The highest peak of staking for users at a loss occurred in the $2500-$3500 price range. Given the minimum staking size of 32 ETH, these users have suffered significant losses, and many may choose to withdraw their ineffective staked ETH to minimize or avoid these losses.
There are currently 500,000 active validators working on Ethereum, and the total staked balance is 16 million ETH (13% of the total supply of ETH), with one validator's average balance being around 34 ETH.
Some key takeaways from this information are:
- Currently, there are about 1 million inefficient ETHs worth approximately $1.5 billion;
- The average daily trading volume of ETH is around $6-7 billion;
- The ineffective volume of ETH will take 8-10 days to withdraw. Each epoch lasts 6.4 minutes, has 256 withdrawal transactions, and we have 225 epochs per day.
So, what can we expect from Ethereum in the future? Based on current market conditions, the Federal Reserve's softer rhetoric, positive CPI data, and a negative news agenda leading up to March 2023 (when the final damages from the FTX collapse will be assessed and Mt. Gox users will receive their payments), Ethereum, like the rest of the market, is likely to experience local growth until March.
However, we are likely to see a market decline around March 10-20, which will be influenced by the Shanghai update. The 8-10 days required to restore capital efficiency for Ethereum stakeholders will put downward pressure on the price.
If the overall market is positive and investors are willing to buy, we can anticipate further growth following this period of decline. On the other hand, if the market is more negative and traders are driven by greed, we may see cascading liquidations and a new fall in the market.
Write in a comment section your opinion whether it will be a further growth or a new fall in the market and also share with us please your thoughts about our ideas. We are a fast-growing derivative exchange and we would like to share our ideas and provide society with a high-quality information to read and to talk about. So that's why we need feedback from you. Check our previous ideas and thanks for your time!
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