3 - 5 minute read
The long-awaited Shapella hard fork has officially been executed on the Ethereum Mainnet. This significant upgrade moves Ethereum one step closer towards a fully functional proof-of-stake system, allowing Ethereum validators to finally withdraw their staked Ether from the Beacon Chain.
The Ethereum Investment Proposal EIP-4895 has been instrumental in pushing staked ETH from the Beacon Chain to the execution layer, making withdrawals possible. According to Terence.eth, the upgrade has closed the loop of the original beacon chain design, enabling validators to deposit and withdraw. The hard fork allows for partial and full withdrawals of staked Ether. When Shapella is forked, it can theoretically unlock 18.1 million ETH, currently equating to over $34.8 billion.
According to the Ethereum Foundation, several mechanisms are in place to prevent a flood of the ETH supply from hitting the market. Ethereum has been working to prevent a supply shock that could destabilize the market by imposing “lock-up” periods that prevent the full release of staked ETH into the ecosystem.
The Ethereum Shapella upgrade has been activated and withdrawals are processing! pic.twitter.com/Krly5GB2K7
— eric.eth (@econoar) April 12, 2023
The mechanisms put in place by Ethereum to prevent a supply shock could have implications on how traders approach the exchange in the near future. The possibility of a supply shock could result in a sudden decline in the value of ETH. Traders need to be vigilant in terms of how much ETH is withdrawn from the system and be prepared to adjust their trading strategies accordingly.
It is essential to exercise caution when trading Ethereum in the coming days as the effects of the Shapella hard fork start to take shape. A supply shock that occurs when too much ETH is released into the market could drive down the value of the asset. Traders need to be prepared to adjust their trading strategies accordingly by closely monitoring the withdrawal of staked ETH.
Exciting news for the #Ethereum community! 💰🚀 #ETH https://t.co/zEKsbzFhRp
— Prism News (@PrismInvestors) April 12, 2023
The Bottom Line
While the Shapella hard fork marks a significant milestone in Ethereum’s journey towards a fully functional proof-of-stake system, traders must remain vigilant. Although the mechanisms put in place by Ethereum should prevent a sudden influx of staked ETH, traders need to be prepared to adjust their trading strategies to account for the possibility of a supply shock that could negatively impact the value of ETH.
