Ethereum Validators Regain Confidence Post-Shapella As Staking Volumes Increase
Ethereum’s recent implementation of the Shapella update on April 12 was key as it brought changes to validators, allowing them to withdraw their staked ETH from the network.
At first, the development led to a backlog of withdrawal requests as investors looked to cash in on their stakes. This led to concerns that mass withdrawals would lead to a drop in the price of ETH. However, the past week has seen reason for positivity as staked assets have started to return to pre-Shapella levels.
Trust of validators restored in recent days
This trend started on April 17th, when there were more deposits than withdrawals for the first time since the Shapella update. At the end of the day, there were about 68,000 ETH staked on the Ethereum network.
This continued on Tuesday, April 18th, when there was a positive balance of 26,680 ETH – with 91,500 ETH deposited against 64,830 ETH withdrawn. Unsurprisingly, that trend continued throughout the week, with ETH staked more than the amount withdrawn, according to on-chain data.
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This trend suggests increased trust among validators in Shapella’s post-update staking process. It also supports the belief that allowing withdrawals has not resulted in the mass exodus of validators.
However, the balance is still negative when considering last week’s data. Overall, around 1.4 million ETH left the network versus 700,000 that were deposited. Furthermore, there are over 650,000 ETH that have not been withdrawn.
As seen in the chart above, not all validators have withdrawn their 32 ETH stake. Some validators partially removed the interest generated from your original deposit.
Ethereum Witnesses Rise in Token Burning
The release of the Shapella update also resulted in a significant increase in ETH burns. This is one of the consequences of the update, and over the last week there has been a steady increase in daily burns.
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In the last three days, a total of 17,000 ETH have been removed from circulation, causing debate in the Ethereum community. This latest increase in burn rates could be linked to the recent boosts in the Pepe (PEPE) and Chad (CHAD) meme tokens that have taken the crypto community by storm.
There has been an increase in the use of MEV (maximum extractable value) robots to earn rewards in meme tokens, rearranging transactions into blocks on the Ethereum network.
The recording mechanism was implemented in August 2021 on the Ethereum network as part of the EIP-1550 proposals. This development was meant to turn ETH into a deflationary asset in the future by decreasing its supply and increasing its value.
At the time of writing, Ethereum is valued at $1,850, down 11% over the past week as the cryptocurrency market turns red. It remains to be seen whether this is a slight market correction or the end of the rally.
Featured image from Istock.com Tokenunlocks, Dune Analytics and TradingView charts