Ethereum Shappella upgrade: Why all the staking experts called it wrong

Why is this?

Because the removal of the lock has significantly reduced the risk of staking Ethereum.

Previously, stakers had to lock their funds for the long term and hope that Ethereum, and crypto as a whole, would hold its value; if the price tanked, there’d be no way to release their funds in time to offload the asset. Their rewards were locked, too, so there was no immediate gain to be made from trusting the project.

So stakers tended to be people who were in it for the tech, and the chance to support the evolution of Ethereum, rather than financial gain. Or they were big institutional investors who could afford the financial hit if the markets took a dive.

Now, however, stakers know they can free their funds in periods of volatility, which means they can secure Ethereum’s future without risking their own.

This will have (and is having) knock-on effects too. Liquid staking, whereby users receive a tradeable derivative token when locking in their asset, is gaining a boost, too.  Now traders are able to move their assets between various liquid staking platforms which will, in turn, be forced to make their tokens ever more liquid to compete with one another.

And all of this is creating a virtuous circle. As the ratio of staked ETH to overall supply increases, this means more validators, more liquidity and more long-term security, which will (or should) improve price stability and make staking even more reliable.

What’s next for Ethereum?

Now that the true impact of Shappella has become clear, commentators are talking about Ethereum leading the charge into the new bull market, even breaking the $5k barrier.

We’re not in the business of giving predictions at rhino.fi, but we can say with confidence that Ethereum is going to keep evolving.

Following Shappella, we’re going to see Danksharding, which will more effectively distribute the responsibility of managing the data created by rollups like rhino.fi. And we’re going to see Proto-Danksharding, which could increase the size of each block created on Ethereum to 2MB, further reducing gas fees for users.

As history has shown time and again, technology can make fools of us all. But whatever happens to Ethereum over the next few months, we’ll be watching closely. And we’ll bring you our (hopefully hot) take when the next big thing happens.

And, just finally… we’ve got our own staking opportunity on rhino.fi via Lido. It returns 4.92% APY and provides wrapped staked ETH, a liquid staking token. You can explore the opportunity by clicking below.