New research is examining the possible impacts of investors having the ability to withdraw their staked Ethereum (ETH) next month.
Binance Research, the market intelligence arm of the crypto exchange Binance, says there are more than 16.5 million staked Ethereum valued at more than $25 billion, about 14% of the total supply.
When the Shanghai planned upgrade takes place next month, those with staked ETH can begin to withdraw their assets. The upgrade is also known as Ethereum Improvement Proposal 4895 (EIP-4895.)
To understand if the upgrade will trigger a sell-off, Binance Research first looks at where most of the ETH is staked.
The single largest ETH-staker is the liquidity provider Lido with nearly 5 billion ETH staked, 29.2% of the total ETH staked. The next largest staking of ETH is on major crypto exchanges like Coinbase and Binance, at 26%, followed by those staking on their own at 25%.
Next, Binance Research looks at the status of the stakings.
A majority of ETH-stakers have had access to liquidity on their holdings for months already, which likely means this segment is unlikely to result in any sudden selling-off, according to Binance Research.
“The point being that 57% of ETH stakers have been able to access liquidity, with both their principal and rewards, for many months already. In some ways, we can almost not worry about this group of users as they have no real reason to sell off after the Shanghai Upgrade.”
Binance Research questions whether the 42.3% “illiquid” stakers, such as solo stakers, will have any reason to sell at this point.
“One could call many of these groups, ‘ETH-maxis’… you tell me, is this group rushing to sell ETH at $1,600?”
Another data point that seems to speak against a big sell-off is how many ETH-stakers are underwater. Per the research, just 31% of ETH-stakers are seeing profits.
“The majority of ETH stakers are underwater and have little financial incentive to sell at the current ETH price (at least on a purely mathematical basis).”
If there is more sell-off than the data seems to suggest will take place, Binance Research says there are limits on withdrawals to reduce ETH price volatility.
Ethereum is worth $1,702 at time of writing.
Don't Miss a Beat – Subscribe to get email alerts delivered directly to your inboxGenerated Image: Midjourney