- In the wake of the Shanghai hard fork, more than 1 million ETH has been withdrawn from the Ethereum blockchain.
- Lachlan Feeney, CEO of blockchain consulting and development firm Labrys, said that ETH was being re-staked back on the chain.
Since the launch of Ethereum’s Shapella upgrade, more than one million ETH coins have been withdrawn, while the price of the coin has increased to around $2k. The Shapella upgrade which includes the Shanghai hard fork, went live on 12 April, 2023. The total number of blocks at that time was 6209536, and the upgrade allowed Ethereum stakers to withdraw their staking rewards for the first time since deposits began in 2020.
What Has Led To The Recent Surge In ETH Price?
According to data from token.unlocks, a company that provides technical analysis on crypto assets, NFTs, Decentralized Autonomous Organizations (DAOs), and Decentralized Finance (DeFi) platforms, the total amount of withdrawn ETH stands at 1.02 million coins, while deposited ETH since the upgrade is only about 373k. Just under 15% of the total ETH supply ( 17.2 million ETH coins worth $36.1 billion) remains deposited (excluding staking rewards).
The total amount of ETH coins pending withdrawal, including rewards is at $1.84 billion, with 877,880 coins queued for withdrawal. An estimated $62.25 million worth of coins will be withdrawn over the next few hours today, as per data from crypto news aggregator The Block. The price of the coin remains steady while the return rate on each ETH coin is only 5%.
Despite the expectations of some analysts and short-sellers, the price of ETH has increased since the implementation of the Shapella upgrade. Kraken, the centralized exchange, initiated withdrawals exceeding 551k ETH coins, valued at more than $1 billion. Other centralized exchanges such as Coinbase and Ninance, have also opened up ETH unstaking withdrawals.
According to Matt Maximo and Michael Zhao from crypto investments and digital asset management company, Grayscale Investments, the withdrawal of staked ETH has been slower than expected and they believe it to be a bullish event for Ethereum. Although withdrawals might continue to grow, they do not necessarily signal selling.
The Shapella upgrade shifted to a Proof-of-Stake (PoS) consensus mechanism, which implements the Ethereum Improvement Proposal (EIP) 4895, thereby enabling users and validators to withdraw their staked ETH. The upgrade also enhanced the efficiency of Ethereum gas fees for specific transactions. As of yesterday, 16.87% or 469k of the active validators are able to withdraw their staked ETH. Moreover, many validators are re-staking ETH back into the Beacon chain.
The Beacon chain manages the registry of Ethereum validators and as validators stake back their ETH coins, the net stake increases.Markus Thielen, Head of Research at digital asset platform Matrixport, noted that the closure of Kraken’s staking services may have contributed to the higher figures. He also anticipates that un-staked ETH from Kraken will be “recycled” back into the Beacon chain.