The second-best blockchain, Ethereum, is coming up with the next best thing; EIP-4895, Shanghai, supposedly in March 2023. The activity would be known as the Shanghai hard fork, implementing future advancement proposals for the Ethereum network and allowing Ether, currently trading at $1,668.46, stakers and validators to withdraw their assets from Beacon Chain.
At the time of writing, the staked ETH amounts to nearly 14% of the total supply of 16 million coins. Meaning nearly $25 billion; with the current TH price, it is expected to be liquidated following the fork.
Should Stakers be concerned?
Most ETH stakers have been waiting for the last three years for rewards withdrawals. This announcement may cause the stakers to line up for the withdrawals selling their ETH as early as possible, but this might not happen as there are numerous reasons for eliminating any concerns, moreover pulling them to increase their investments into staking after Shanghai.
Ethereum to be the leading PoS network
Though the market cap had pushed ETH to second place, it proudly holds the leading position as a Proof-od-Stake (PoS) network. At the time of writing, it stood for 65% of TVL in DeFi protocol, approximately around $48.7 billion.
Even with the current market conditions, the amount of ETH deposited has increased considerably, reaching nearly 500,000 validators in January 2023.
Currently, the yield is stable at a 5.45% annual percentage rate (APR). Hence newbies are expected to habituate themselves to the overall yield compensation structure, which comprises staking rewards, tips and maximal extractable value (MEV). With MEV-boost, stakers can increase the rewards by 2x to 3.5x over vanilla blocks.
Attractive Liquidity
With the uncertainty of withdrawal eliminated, the initial staking percentage of 14% is expected to multiply. Most of these staked coins were of the bull run, and chances of shorting in the bear market are highly unlikely.
EIP-4895: The Shanghai Upgrade
EIP-4895 will focus on allowing withdrawals on the execution layer, Shanghai, and the consensus layer, also known as the Capella upgrade. The roadmap shows many milestones after Shanghai, commonly referred to as “Surge”, “Verge,” “Purge”, and “Splurge”. The immediate future shows that EIP-4844 (proto-dank sharding) could scale Ethereum by reducing gas fees, and EIP-3540 aims to reduce Ethereum Virtual MAchine’s resource requirement.
2022 saw a 178% increase in developer activities in Ethereum, causing 1.5 million downloads. Even with a slower market, smart contracts deployment hit 4.6 million deployments in Q4 2022.
Switching consensus mechanisms may have boosted the growth to some extent, but further developments are required to steal the top position.
Andrew is a blockchain developer who developed his interest in cryptocurrencies while his post-graduation. He is a keen observer of details and shares his passion for writing along with being a developer. His backend knowledge about blockchain helps him give a unique perspective to his writing
Source: https://www.thecoinrepublic.com/2023/02/02/shanghai-fork-coming-at-ethereum-do-stakers-need-to-dump-eth/