a photo of ethereum coin

Ethereum Upgrade To Release $33 Billion In Cryptocurrency

Tamila Tari
Tamila Tari
An intuitive content creator in the tech-land of mobile app development

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The world of cryptocurrency Ethereum has made enormous progress. It seems the up and downs of cryptocurrency have become a chance for Ethereum. Ahead of a significant network update, ether has outpaced bitcoin this week and is currently trading at a nine-month high. Ethereum upgrades ensures  a long-term investment in a profitable form for digital currency followers. Keep reading to get the newest updates. 

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The Latest Ethereum Upgrades

This week, Ether reached a high that hasn’t been seen in nine months, ahead of a significant network update that crypto aficionados believe will make investing in the digital currency a more profitable endeavor over the long term. The price of the world’s second-largest cryptocurrency has increased by around 6% over the past three days, pushing it beyond $1,900, but the price of bitcoin has been relatively stable throughout this span.

An upgrade to the blockchain that has been given the name “Shapella” will enable owners of ether to withdraw their assets beginning on the following Wednesday. Up until this moment, investors would have been required to use centralized exchanges such as Coinbase or decentralized finance (DeFi) protocols such as Lido in order to essentially trade their locked-up ether for a token of similar value.

A photo of a ethereum coin
Ethereum's strong and adaptable blockchain architecture supports decentralized apps and smart contracts.

The most recent upswing has followed a pattern that is strikingly similar to other waves of enthusiasm around network enhancements. In September, the price of ethereum surged ahead of a historic switch to a method of safeguarding the network that is known as proof-of-stake. This method is more energy-efficient.

In the past, transactions on the Ethereum blockchain were validated by a massive network of miners located all over the world. These miners operated highly specialized computers that solved complex mathematical problems. Miners were replaced with validators as part of Ethereum’s transition to the proof-of-stake consensus algorithm following the so-called “Merge” upgrade in September. Instead of running enormous banks of computers, validators use their existing caches of ether as a mechanism to verify transactions and mint new tokens. This reduces the amount of energy that is required for the process.

Regarding the upgrade that took place in September, Danny Ryan, a researcher at the Ethereum Foundation, was quoted as saying, “Ether itself becomes a productive asset.” “It’s not something you can just gamble on, but it is something that has the potential to pay off in the long run.” In the era following the merger, ether has taken on some features of a conventional financial asset, such as the practice of paying holders interest. 

Ryan stated that “it’s probably the lowest-risk return inside of the ethereum ecosystem,” adding that returns in other areas of DeFi require smart contracts and other sorts of counter-party risk. “It’s probably the lowest-risk return inside of the ethereum ecosystem,”

The price of ether has lagged behind that of bitcoin so far in 2018, although recent improvements have started to narrow the performance gap. In comparison, bitcoin’s value increased by 70 percent in 2023, while Ether’s value increased by roughly 59 percent.

At the moment, more than 18 million ether tokens with a total value of approximately $32.5 billion have been staked. This is approximately 15% of the total supply of ether, which means that these tokens are regarded as locked assets. 

What Are The Concerns About Ethereum?

There is some concern that releasing so many tokens would have an effect similar to flooding on the market. While the next update will unlock much of that value and give holders more control over their assets, there is also some concern that releasing so many tokens will flood the market.

According to a report published by K33 Research on Tuesday, even with withdrawals being capped, around $2.4 billion worth of ether might flood the open market. “A plunge is likely to happen shortly after the completion of the upgrade, as a huge amount of ETH will be unlocked, and many people will also be selling their ETH,” said Ilya Volkov, who owns a blockchain-based finance platform.

“This is because a huge amount of ETH will be unlocked, and many people will also be selling their ETH.” Volkov expressed optimism about the market’s performance in the long term.

A photo of a logo of ethereum and bitcoin
Decentralized finance (DeFi) and non-fungible tokens (NFTs), two fast-growing cryptocurrency areas, are centered on Ethereum. Ether is needed for additional Ethereum DeFi and NFT projects.

According to information provided by a company specializing in crypto data analytics and journalism, The Block, the ratio of open interest in ether put options to open interest in ether call options reached its highest level since May on Tuesday.

This could hint that more bearish wagers are being placed leading up to the network upgrade. According to research conducted by Bernstein, approximately 70 percent of the 18 million ether tokens that are currently locked on the blockchain are staked through protocols such as Lido. This creates a measure of liquidity for investors.

Bernstein wrote, “Liquidity for 70% of staked ETH is not new, and they could do it anyway.” The company referred to the remaining thirty percent of holders as “original believers,” It is highly improbable that they will sell their stakes at this price.

The ability to deposit and withdraw tokens may attract more investors to stake ether. Some analysts have stated that they anticipate a substantial influx of capital onto the network once it demonstrates that money staked can be withdrawn with a relatively low amount of difficulty.

Final Thoughts...

With this change, Ethereum became a more cost-effective network protection approach, and validators replaced miners in validating transactions and issuing new tokens. With the impending upgrade, ether will become a productive asset capable of generating earnings, allowing it to act more like a traditional financial asset.

This is a good thing for Ethereum and its investors. There is no doubt that Ethereum upgrades have excellent potential for blockchain technology. None of us know what will happen through the ups and downs of the crypto world.

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