Shift toward Liquid Staking Derivatives expected after ETH Shanghai upgrade

Jan. 15, 2023 at 11:00 pm

By Josh O'Sullivan and James Van Straten

Ethereum's Shanghai upgrade in March will enable withdrawals from the beacon chain by granting ETH validators the ability to unstake.

The Ethereum (ETH) Shanghai upgrade is due to release March, enabling withdrawals from beacon chain and allowing ETH currently staked in ETH 2.0 validators to be unstaked.

With over 70% of ETH stakers currently at a loss with their ETH inaccessible, the Shanghai upgrade will enable stakers access to their ETH and decide whether to sell at a loss or hold long-term until back in profit.

Post-ETH merge

Back in September 2022, the ETH merge took place in the Bellatrix upgrade. In the process, block validation was taken over by the beacon chain completing the transition from Proof of Work (POW) to Proof of Stake (POS).

The beacon chain is organized by validators who have deposited 32 ETH before being able to begin operations. Currently, the number of beacon chain validators has reached 500,000 — with a recent burst in new active validators — with a total of over 16 million ETH staked in the ETH 2.0 deposit contract.

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