Unlocking the Potential

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Ether, the native cryptocurrency of Ethereum, has surged to its highest level since May 2021, breaking above $2,100 on April 16. The rally comes amid a wave of withdrawals from the Beacon Chain, the proof-of-stake network that will eventually replace the current proof-of-work system.

Ethereum 2.0, a major upgrade that seeks to enhance the network’s scalability, security and efficiency, launched its first phase in December 2020 with the Beacon Chain. The Beacon Chain allows users to stake their Ether and become validators, who are responsible for processing transactions and securing the network.

However, until recently, staking Ether on the Beacon Chain was a one-way ticket, as there was no way to withdraw or transfer the staked funds until the next phases of Ethereum 2.0 are implemented. This meant that stakers had to lock up their Ether for an indefinite period of time, with no access to liquidity or profits.

That changed on April 12, when the Shapella hard fork was activated on the Beacon Chain. Shapella introduced several improvements and bug fixes to the network, but most importantly, it enabled withdrawals and transfers of staked Ether for the first time.

According to data from beaconcha.in, over 1 million Ether worth $2.1 billion has been withdrawn from the Beacon Chain within the first four days of Shapella. The withdrawals have come from 473,700 requests, with Saturday, April 15 being the largest withdrawal day at 392,800 Ether. Out of the 540,000 validators who are currently staking Ether, about 469,000 or 87% of them have gained the ability to withdraw their staked funds.

Ether’s price may have been affected by the withdrawals, as some stakers could have chosen to either sell their coins or transfer them to other platforms. The supply of Ether on exchanges has increased by 4.5% since Shapella, according to data from CryptoQuant. This may have created some selling pressure in the short term, but it also reflects the increased demand and liquidity for Ether in the market.

On the other hand, some stakers may have chosen to re-stake their Ether back onto the Beacon Chain or use it for other purposes such as lending, borrowing or investing in decentralized applications (DApps). In fact, despite the withdrawals, the total amount of Ether staked on the Beacon Chain has continued to grow reaching a new all-time high of 7.3 million Ether worth $15.4 billion on April 16. This shows that many stakers are still confident and committed to Ethereum 2.0 and its long-term vision.

The Shapella hard fork is a major milestone for Ethereum 2.0 and a positive catalyst for Ether’s price. It has reduced the risk and uncertainty for stakers and increased their flexibility and options. It has also demonstrated the progress and innovation of the Ethereum developers and community. Ethereum 2.0 will bring more enhancements and advantages for stakers and users of Ethereum as it launches more phases in the next months and years.

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