Ethereum Shanghai Upgrade: Analyzing Market Sentiment and Liquid Staking Leaders

Ethereum upgrade scene, Shanghai skyline, glowing network connections, staking participants with diverse emotions, digital tokens representing stETH & cbETH, soft chiaroscuro lighting, baroque art style, mixture of optimism & caution, locked-up ETH reflecting bullish trend, vibrant hues.

Ethereum recently underwent its historic Shanghai upgrade, enabling stakers to finally withdraw their funds from the mainnet – an event eagerly awaited since staking was first introduced in December 2020. The aftermath of the upgrade provides valuable insights not only into the market’s sentiment but also the staking landscape and how certain entities stand to gain from it.

Coinciding with the upgrade, Kraken U.S. staking customers were effectively flushed from the system due to the SEC’s regulatory action against the crypto exchange. Kraken settled with the SEC for $30 million and suspended its staking operations for Americans back in February. Although a small portion remains, this bearish player has largely exited the system.

Comparatively, Coinbase holds the lion’s share of entities waiting to withdraw staked funds, with more than 55,000 ETH ready to exit. Notably, there has been a net increase in the number of addresses depositing Ethereum for staking vis-à-vis those withdrawing. The 97,586 ETH staked, valued at $189 million at today’s prices, indicates a strong bullish sentiment on Ethereum staking and the extra yield it offers.

Simultaneously, this uptrend in staking activity bodes well for Ethereum, as the locked-up funds translate to less ETH being sold in the open market. Analyzing further, the upgrade has also bolstered liquid staking leaders such as Lido Finance, a critical player within this domain.

Liquid staking involves depositing Ethereum in a protocol that stakes the ETH on behalf of users, who receive a token representing their staked position along with the accumulated rewards. In Lido’s case, this token is called stETH, while Coinbase’s equivalent is cbETH. According to data from Nansen, Lido’s staked ETH accounts for 79% of the total market, hosting a remarkable 6 million Ethereum. Coinbase secures second place, capturing about 15% of the market.

The Shanghai upgrade and its subsequent impact on the Ethereum staking market reveal the continuing popularity of staking and the expansion of liquid staking service providers. As a result, market players ought to keep a keen eye on these developments, considering the overall bullish sentiment and the potential returns from staking Ethereum.

While Ethereum’s future appears optimistic after the recent upgrade, it should be remembered that no investment is without risks, and market conditions are subject to frequent fluctuations. Nonetheless, the market can benefit from the strategic positioning of top players such as Lido Finance and Coinbase, capitalizing on the growth potential of Ethereum staking in the current financial landscape.

Source: Decrypt

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