Monday, March 4, 2024

Ethereum Staking and ETH Price Projections Post Shanghai

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The Merge became one of the key new features of Ethereum when it moved from a proof-of-work (PoW) consensus mechanism to proof-of-stake (PoS). This transition was designed to improve the scalability, security, and sustainability of the Ethereum network, whilst also decreasing its negative climate footprint.

Proof of stake consensus introduced the world to the notion of staking. It is an essential component of Ethereum 2.0, allowing users to secure the network and earn rewards for validating blocks on the blockchain. In this article, we will explore what will happen to ETH price post-Shanghai and look more deeply into staking and its alternatives.

ETH Staking Explained

Ethereum staking involves locking up a certain amount of ETH to participate in the network’s PoS consensus mechanism. Ethereum staking requires a minimum of 32 ETH, which is known as a validator node. A validator node is a computer that runs the Ethereum software and participates in the consensus process. Validators are responsible for verifying transactions and adding them to the blockchain. Validators are also required to maintain a certain level of uptime to ensure the network’s security and stability.

Due to the latter, staking is usually done on the cloud, as it eliminates the chances of validator nodes being switched off. Such instances may lead to slashing, which in the Ethereum staking world equals to loss of staked funds.

ETH Price Teardown

Those who are in crypto since day one may remember the times when ETH cost $5, then $20, which was the point at which many of us sold it, thinking that there is no way that ETH can appreciate higher.

And still, it did, going up to $100, then $200. The rest is history and in today’s world, it is hard to comprehend that the ETH price was ever this cheap. Those who understood the real power behind the Ethereum blockchain stuck around and turned into millionaires in a short period of just a few years.

The year 2020 kicked off the biggest rise of ETH when it took off from $400 and only stopped at a year later, valued at subliminal $4300! Those were the hay days for ETH developers and traders, the time when everything seems possible.

However, Covid and the pandemic that it brought, couldn’t pass unnoticed, affecting the world and the crypto industry. Between lockdowns and vaccine queues, ETH price dropped to $1,600 and set an important support level that pushed the price back into a bull run mode. This new positive cycle raced past the previous all-time high, settling at never seen before $4800 and over.

Unfortunately, though, not a single asset that is governed by market sentiment can remain at any level for too long. This includes ETH too, as it began a long descent from the mountain that it managed to climb over a short period of just one year.

The Blockchain Updates and Utility

Regardless if it is crypto or any over type of currency or asset, value is king. It is driven by the utility of an asset and the greater it is, the bigger the value will get. What differentiates Ethereum from the rest of the crypto pack, is the broadness of its utilitarian scope.

Store of value and being able to transact with ETH is the boring part of utility that any other blockchain can do too. Well, at least it is what the teams behind those other blockchains say. In reality, nothing compares to the behemoth that Ethereum has become and that too acts as a safety net for the price of ETH.

Ethereum is referred to as the Internet of the blockchain world. It is not just a shared database, but a platform on which developers build apps and projects. By being an ecosystem people can build on, ETH value spikes to absolute. This is not reflected by its price though, which signals towards ETH is incredibly undervalued. It just takes time, which is confirmed by ETH trading volumes on the crypto exchanges like Gate.io, where it historically shows a continuous increase.

Staking and Shanghai

Not only does Ethereum staking have great potential, but it is also about to get a new critical feature. See, before Shanghai, validators were unable to withdraw the staked ETH. As for Shanghai implementation though, they can. This may result in ETH being unstacked which should increase supply. At the same time, such a move will increase the staking APY, thereby making staking more attractive. Once the market stabilizes though, there will be an equilibrium of the number of validators on the beacon chain. This, together with a slowing down natural supply of ETH, should ensure that the value of this one-of-a-kind cryptocurrency should remain high.

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