Cryptocurrency exchange Binance shared information about the upcoming Ethereum (ETH) update in its guide, which it recently published.
The Ethereum (ETH) blockchain is gearing up for a major update called Shanghai, which is expected to happen on April 12. The update will enable users to withdraw their staked ETH for the first time since the launch of Beacon Chain in December 2020.
According to the Binance guide, the Shanghai update forms part of Ethereum’s long-term roadmap for transitioning from a proof-of-work to a proof-of-stake consensus mechanism, which aims to make Ethereum more scalable, secure and energy efficient.
Binance Reveals Unknown About Ethereum Withdrawals
The Binance guide also explains that over 16.5 million ETH worth approximately $31 billion have been staked by over 520,000 validators to date. These stakers have won approximately 1.03 million ETH in rewards, which equates to approximately $1.8 billion at current prices.
However, not all stakers are willing to sell their ETH as soon as it is unlocked, according to the Binance guide. Many are currently at a loss and have little financial incentive to sell at the current ETH price of around $1,800.
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Moreover, around 60% of ETH staked comes from liquid staking providers or centralized exchanges that already offer liquidity access, such as Binance.
The question that comes to mind is whether “illiquid” stakers, i.e. those who do not take a liquid staking derivative and therefore do not have access to liquidity for their staked ETH, are likely to sell their ETH as soon as it is unlocked.
According to the Binance guide, this is not an easy question to answer, but on the whole, most of the people who join the network as ETH validators are known as Ethereum maximalists. This group prefers ETH not because of its price, but because of the underlying technology.
According to Binance analysts, this hardcore ETH proponent may not be too keen on selling their ETH at the current price.
The Binance guide said that these partial withdrawals are unlikely to significantly affect the price of ETH, given that withdrawals will span days (or even weeks) and daily ETH volume is close to $8-10 billion.
*Not investment advice.