As Ethereum’s highly anticipated Shapella upgrade approaches, data suggests that the majority of network users do not intend to immediately utilize the changes brought about by the protocol update.
Figures from analytics firm IntoTheBlock reveal that a mere 0.6% of Ethereum validators have plans to withdraw their stakes following the hard fork. According to a tweet from the market intelligence provider on Tuesday, only 3,614 out of 562,717 Ethereum validators had opted to withdraw their stake as of April 10.
Understanding Ethereum’s Shapella upgrade
The Shapella upgrade is set to take place at block 6209536, which is expected to occur at 10:27:35 PM UTC on April 12. This update serves as a follow-up to the well-known Merge update in September 2022, which transitioned Ethereum’s consensus mechanism from proof of work (PoW) to proof of stake (PoS). The PoW model relies on energy consumption to secure the blockchain, while the PoS model uses cryptocurrency, making it a more energy-efficient alternative.
Shapella is a fusion of the “Shanghai” and “Copella” upgrades, which will facilitate ETH staking withdrawals on both Ethereum’s execution and consensus layers, respectively. This marks the first occasion that users can withdraw their stake since the launch of Ethereum’s beacon chain in December 2020.
An examination of Ethereum’s staking contract indicates that over 18.14 million ETH, valued at more than $34.7 billion, is currently staked on the network. This accounts for approximately 15% of all ETH in circulation.
There has been speculation that allowing the withdrawal of such vast amounts of staked ETH could potentially trigger a market sell-off by investors who may have already cashed out under different circumstances. Last month, cryptocurrency exchange Coinbase expressed the expectation of receiving a high volume of withdrawal requests once the update is implemented, which could take “weeks to months” to fully process.
It is worth noting that Ethereum’s price experienced a decline immediately after the Merge update in September, despite an initial surge in anticipation of the upgrade. The limited number of validators planning to withdraw their stake immediately after the Shapella upgrade might help mitigate any short-term market impact. However, the situation warrants close monitoring as the upgrade is rolled out and users begin to interact with the new protocol changes.
