A new report from Glassnode has suggested that the highly anticipated Shanghai/Capella hard fork, scheduled for April 12, will not have as dramatic an impact on the Ethereum economy as some had feared.
The hard fork is set to enable withdrawals of staked ETH. It has raised much speculation about the potential market and supply impacts as the approximately 18 million ETH staked (worth $33.92 billion and 15% of ETH’s total circulating supply) becomes unlocked.
Staking Cohorts: Understanding The Ethereum Staking Landscape
Glassnode’s report establishes cohorts of stakers and assesses the potential sell-side pressure that may occur due to the unlock event.
After the Shanghai upgrade, Glassnode predicts that only 100k ETH ($190M) of the total collected awards will be withdrawn and sold and that only about 70k ETH ($133M) will become liquid.
It is significantly less than the 170k ETH that had been anticipated to be sold after the upgrade. Furthermore, Glassnode predicts that only a fraction of the amount withdrawn will become liquid.
Glassnode’s report also establishes different staking cohorts to determine who will most likely withdraw staked ETH and how much sell-side pressure could be expected from these withdrawals.
The analysis categorizes those who send 32 ETH to the Ethereum smart contract to become a validator, namely depositors, into distinct groups.
These groups are determined by various factors such as the duration of their active stake, the number of validators they own, their unrealized profit/loss across owned validators, and whether they are individual depositors or third-party staking providers.
The analysis comes to the conclusion that the sell-side volume remains within the typical weekly exchange inflow volume range even in the extreme scenario when the maximum rewards and stakes are withdrawn and sold.
Therefore, the report suggests that even the most extreme case will have an acceptable impact on the price of ETH. It will come as welcome news to Ethereum investors concerned about the potential sell-side pressure that could result from unlocking staked ETH.
The report also highlights the growing market share of liquid staking providers, particularly Lido, which holds a market share of over 30% of the total staked ETH.