Glassnode, a blockchain analytics firm, has released a report on what happened to the 1.55 million Ethereum (ETH) that was withdrawn after the Shanghai/Capella hardfork. This upgrade empowered users to receive rewards that had accumulated, withdraw their staked positions, or make modifications to their staking configuration.
Glassnode’s report revealed that the Ethereum market remained stable despite the increased liquidity resulting from the upgrade, contrary to popular belief.
Instead, the market witnessed a temporary price surge to $2,110 in the week following the upgrade, which eventually reverted back to $1,920, likely due to the overall decline in the digital asset market.
In a previous report, Glassnode attempted to gauge the degree of true sell-side pressure expected from the withdrawal of the ETH, which they estimated to be around 170k ETH.
In their latest report, Glassnode analyzed the post-upgrade situation, giving particular attention to the entities responsible for initiating withdrawals and deposits and the balance between them.
Glassnode estimated that during the week following the Shanghai/Capella update, approximately 789.5k ETH would be withdrawn, with 170k ETH being sold. However, Upon examination, it was found that the actual numbers of ETH rewards and unstaked ETH were between the estimated and maximum possible amounts.
Partial Vs. Full Ethereum Withdrawals
Specifically, 856k ETH rewards were earned, and a total of 232k ETH was unstaked, with 80% of that amount being withdrawn partially. Further analysis was conducted to determine how much of the withdrawn stake was sold.
According to Glassnode’s analysis, the amount of unstaked Ethereum and rewards after the upgrade was within their estimated range, with 856k ETH in rewards and a total of 232k ETH being withdrawn. Most withdrawals were partial, which accounted for 80% of the released ETH.
Despite the upgrade introducing new withdrawal options, there was no significant increase in inflow volume, with up to 1.8 million ETH of exchange inflows in the first week after the upgrade. These numbers were much smaller than previous sell-side events and in line with typical inflow patterns.
Approximately 300k stakers needed to update their withdrawal credentials to receive staking rewards, with 85% of missing credentials being updated in the first week and over 200k credentials updated in the first two days. Currently, 98% of the credentials have been updated.
Nevertheless, Glassnode’s report suggests that the mechanics of Proof-of-Stake for both incoming and existing validators have played out as intended, with Ethereum’s consensus mechanism remaining stable throughout the process. It is likely to de-risk longstanding engineering challenges, with net positive effects for the network’s security and the Ethereum market in general.
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