The launch of the Shanghai upgrade on Goerli testnet will be the final dress rehearsal before the mainnet launch in April next month.
Experts explain why ETH validators may not sell their unlocked tokens after the Shanghai upgrade.
Finally, the Ethereum developers have all geared up for deploying the much-awaited Shanghai upgrade (dubbed Shapella) on the Goerli testnet ahead of today March 14, at 10 pm. This will be the final dress rehearsal of the Shanghai upgrade before going live on the Ethereum mainnet.
The Shanghai upgrade is quite important for the Ethereum community as it will be for the first time that investors can with their staked ETH ever since Ethereum began staking with the beacon chain. back in 2020.
Last month in February, the developers successfully implemented the Shapella upgrade on the Sepolia testnet. If the Ethereum developers see success with today’s launch of the Shapella upgrade on the Goerli testnet, they will proceed further for implementing it on the Goerli testnet next month in April 2023. After going live on the Goerli testnet, developers are confident that they will unlock the staked ETH within three to four weeks.
The implementation of the Shapella hardfork on the Goerli testnet will be highly watched considering that this is the largest Ethereum public testnet. Besides, this is also the last chance for staking providers to ensure that it is possible to withdraw and unlock the staked ETH tokens before Shapella reaches the Ethereum mainnet.
What Will Happen to ETH price after Shanghai Upgrade?
One of the biggest concerns among the Ethereum community is that the ETH token unlocking will lead to a massive supply of the ETH token in the market. Several crypto enthusiasts shared concern that this could lead to huge selling pressure on ETH thereby dragging its price down.
However, not all validator nodes on the Ethereum blockchain would be willing to withdraw entirely. Christine Kim, VP of research at Galaxy Digital believes that some 30-50% of the validator nodes will withdraw the rewards and keep the staked ETH as it is. Kim added that there would be a very small percentage of validators willing to withdraw their entire staked ETH holdings.
Thus, the circulating supply of ETH won’t rise to those levels where it will put selling pressure on the asset. Kim shared two reasons why validators would withdraw only a very small percentage of full withdrawals.
In case validators require liquidity from their entire staked ETH, they would opt for liquidity staking instead of opting for ETH.
The ETH price has already declined significantly since it started staking in 2020. As a result, most unstaked ETH holders will be sitting at an unrealized loss making it less attractive to sell at this point.
Along with Bitcoin, ETH has been on a strong recovery trajectory this week. ETH is already up by 14% on the weekly chart and is currently trading at $1775 with a market cap of $217 billion. Also, whales were quite active during the recent price correction.
On-chain data provider Santiment reported that ETH whales holding between 1,000 and 10,000 ETH have added 400,000 Ethereum tokens worth $600 million during the recent dip.
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