3 - 5 minute read
Binance, the world’s leading cryptocurrency exchange, announced on Thursday, April 13, 2023, that users who staked ether (ETH) through the exchange will be able to redeem coins with their BETH holdings on a 1:1 basis, starting from April 19, 2023, at 08:00 coordinated universal time (UTC). This announcement comes just hours after the highly anticipated Shapella hard fork was implemented, which opened withdrawals of more than 18 million ETH staked in the blockchain since late 2020.
The Ethereum blockchain is going through a major upgrade — Shapella hard fork, that will aid staking withdrawals. For those unfamiliar with the Ethereum blockchain, Ethereum 2.0 (aka Eth2 or Serenity) is one of the most ambitious blockchain projects of all time. Its aim is to take the place of the current proof-of-work (PoW) algorithm with a proof-of-stake (PoS) algorithm, which addresses scalability and energy efficiency issues. In PoS, validators and stakers put up their own money to verify transactions and mine blocks. They then earn a ‘reward’ for their contribution as opposed to transaction fees in PoW. The stakes of validators are locked in the blockchain, and they have to wait until their stakes are unlocked before being able to withdraw. The staking system helps power the network and rewards validators for keeping the blockchain secure.
However, for stakers, it can be hard to retrieve their money or move their stakes between platforms. Hence, the introduction of the new Shapella upgrade, which now allows stakers to withdraw their stakes. Binance allowing users to withdraw their staked ether through BETH will serve as a major breakthrough for traders to have a flexible way to manage their ETH assets and opt for the widely accepted form of currency.
According to Binance, after a user requests for withdrawals, the process may require 15 days to several weeks for completion, which implies the network is moving slowly due to high demand. This has a significant impact on Eth2.0 as it illustrates demand for the asset, which should drive up its value. On the other hand, the slow withdrawal process could lead to users losing trust in the ecosystem, reducing demand for the asset, and, as a result, driving down its value.
With the introduction of Binance’s support for Ether staking withdrawals, the demand for Eth2.0 is likely to rise. Hence, traders are advised to pay close attention to the coin’s price and make entry and exit decisions based on market sentiment, fundamentals, and technical analysis. Additionally, traders should also be aware of the processing limitations on the Ethereum network, which means that daily redemption quotes can be subject to change, leading to different timeframes for completion. This could affect the earning potential and should be considered when making trades.
The Bottom Line
Binance’s announcement on Thursday enables traders to redeem their staked ETH holdings for BETH tokens on a 1:1 basis starting from April 19, 2023. While this serves as a significant breakthrough for traders, especially since the Shapella hard fork was implemented, the slow processing time could lead to users losing trust in the asset, reducing demand, and driving down its value. Traders should, therefore, pay appropriate attention to the price of ETH and make entry and exit decisions based on the market sentiment, fundamentals, and technical analysis, weighing the earning potential against the slower processing time. However, with the new system in place, traders will have increased flexibility in managing their ETH assets and can opt for the widely accepted form of currency, which should drive up its demand and value.
