Ethereum Shanghai Upgrade: A Game Changer for ETH Investors?
This article will be the first in a series by OpenOcean focusing on the Ethereum network’s upcoming Shanghai Upgrade’s EIP-4895
About the Shanghai upgrade
Since September the Ethereum mainnet has locked these ETH staking tokens and only allows validators and stakers the chance to withdraw upon release of the Shanghai upgrade. The network update is expected to impact the proportion of ETH participating in staking relative to its overall supply. This change could then have an influence on the market supply and demand for ETH.
The price of ETH after the upgrade?
For most, the Shanghai upgrade will have significant ramifications in regards to circulating supply and staked supply, so whether you’re holding ETH, staking Ethereum, or using it as part of LP provision, it’s worth being in the know so you can make the right choice.
So what exactly is going to happen once the Shanghai upgrade goes live? Well price wise there could be a lot more volatility in the short term. The upgrade will unlock a lot of liquidity, whether this flows into more staking, providing LP’s for rewards or ends up being traded is still anyone’s guess.
On the whole, enabling withdrawals from staking promotes a freer ETH market, this should be seen as a net-positive effect because it reduces artificial control effects on the price and circulation of ETH.
Liquid Staking and Positioning Yourself
By far the biggest movement we could see could be the several different methods of staking liquid ETH. Various liquid staking protocols like Lido and Rocket Pool let ETH holders stake tokens without having to run a validator node, at the moment, liquid staking ETH accounts for 32.65% of staked ETH. And of course, if you are attached to CEX, you can also stake your ETH on popular exchanges like Binance or Coinbase.
Common questions surfaced after the merge were “how much ETH do I need to stake to run a node” or even “how do I stake ETH”. Individuals found it difficult to run a node because the requirements involve locking 32 ETH. This paved the way for liquid staking derivatives to thrive, liquid staking tokens fractionalise ownership of nodes and have increased in popularity due to easy accessibility and a lower price entry barrier.
If buying Ethereum for the long term or trading ETH, using the traditional swap feature on OpenOcean will ensure you get the best price 100% of the time thanks to the way in which the platform can route trade orders using the unique-novel routing algorithm.
No one knows what is going to happen price-wise or token-wise for that matter. What we do know is that the Shanghai upgrade is going to introduce several crucial features for Ethereum stakers who have been waiting ever since the initial move from proof-of-work to proof-of-stake. Whilst it’s unclear what the main intentions of #DeFi users will be once Shanghai goes live, one thing we know for certain is that this is a much needed upgrade and eventually should be net-positive for the token and chain going forward.
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