• Ethereum is set to undergo its next upgrade, called Shanghai on April 12, 2023.
• This upgrade will unlock the ether that has been staked since the Merge.
• Market participants can take advantage of this potential selling pressure by preparing for the upgrade.
Ethereum’s Upcoming Shanghai Upgrade
The Ethereum network is set to undergo its next upgrade, called Shanghai, on April 12, 2023. When the Shanghai upgrade is implemented, this will effectively unlock the ether (ETH) that has been staked since the “Merge.” In September, when Ethereum underwent the Merge, a significant upgrade to its blockchain switched from a proof-of-work (PoW) blockchain to a proof-of-stake (PoS) blockchain.
Benefits of Staking Ether
A key benefit of the upgrade is that individuals are now able to run a validator node and stake their own ether in order to help secure the network in the absence of traditional mining infrastructure that had secured Ethereum since its original launch. Market participants are motivated to stake their ether because they are able to generate rewards paid in ETH from the network for their staking contributions. It no longer requires significant upfront investment into mining hardware and software in order to reap rewards from the Ethereum network.
Unlock Of Ether
The downside to staking Ethereum after the upgrade was that those staking (or those running validator nodes) were required to stake their ETH until the next upgrade. This lack of liquidity for ETH holders created an illiquid amount of ETH that was unable to be traded or transferred until after April 12th when it will be unlocked through this upcoming update.
Preparation For The Unlock
How Advisors Can Prepare for Ethereum’s Unlock: Advisors should consider how they can prepare themselves and their clients for this upcoming event as it could create volatility within markets as well as opportunities for market participants who take advantage of any potential selling pressure due to unlocked tokens entering back into circulation . They should assess whether or not they want exposure directly in Ether or any other asset associated with Ethereum such as Wrapped Bitcoin or MakerDAO’s Dai stablecoin before and during this event taking place following April 12th .
By properly preparing and researching potential outcomes prior to April 12th , advisors should be better equipped at understanding what may happen once these tokens become unlocked and look at ways they can potentially capitalize on any resulting price movements as well as ensure their clients remain protected if there is an increase in volatility due to these tokens being released back into circulation .