Glassnode, a data analytics company, has recently conducted a study to evaluate the impact of the Shanghai upgrade on the Ethereum ecosystem. According to their findings, the impact of Shanghai, also known as Shapella, will not be too severe.
In particular, Glassnode estimates that a total of 170,000 ETH will be withdrawn from the Beacon Chain and returned to the market, of which 100,000 ETH (equivalent to $190 million) will be sold by validators to lock in profits, while the remaining 70,000 ETH will be held for liquidity.
The highly anticipated Shanghai/Capella hard fork is scheduled to take place on 12-April-2023, enabling the withdrawal of staked #Ethereum.
In this extended edition of the Week On-Chain, we shall evaluate the overall Ethereum staking landscape, develop a framework to establish… pic.twitter.com/EVgsz3s6GG
— glassnode (@glassnode) April 11, 2023
Even in the worst-case scenario where all the ETH is sold, the selling pressure would still be within the average weekly cash flow into Ethereum, Glassnode noted.
The report also revealed that third-party staking service users received the largest portion of unlocked ETH. However, this segment has the least demand for selling because they have yet to make a profit on their initial collateral. Currently, only 253 ETH users are waiting to withdraw their staked portion, which is considered a very small number. Most are self-stakers who have been involved since the early days. Glassnode believes that these withdrawal orders are for node adjustment purposes rather than exiting the blockchain altogether.
However, in the case that everyone closes their node, Ethereum’s PoS design will gradually return ETH, avoiding the situation where all assets are withdrawn at once. Therefore, even in the worst-case scenario, Ethereum’s economy can still maintain balance for a few days to a few weeks.
In conclusion, Glassnode’s study suggests that the impact of the Shanghai upgrade on the Ethereum ecosystem will not be significant, and the Ethereum economy can withstand potential selling pressure. Nevertheless, it is important to keep a close eye on the market and be prepared for any potential fluctuations.
Read more:
- ETH Supply Continues To Decrease With Shapella Upgrade: What Does It Mean For The Market?
- Staked ETH At A Loss Could Reduce Selling Pressure After Shanghai Upgrade