Governance tokens of top liquidity staking platforms are rallying in the charts. At press time, Lido DAO (LDO) is up 8.1% in the last 24 hours and 19.4% in seven days. Rocket Pool (RPL) is up by 8.7% in seven days, while StakeWise (SWISE) is up by a huge 67.7% in the same time frame.
The development comes as investors anticipate Ethereum’s Shanghai upgrade, scheduled for March 2023. It was announced in December, that the network’s upcoming hard fork or backward-incompatible upgrade will allow withdrawals of ether invested in the Beacon Chain since December 2020.
Over 40% of the total ether deposits are staked utilizing liquid staking protocols. Dune Analytics reports that 15.7 million ETH are presently staked across several platforms. That explains the upward price movement of governance tokens with liquid staking ahead of the Shanghai upgrade.
Ether has the lowest staking ratio among layer 1 tokens at 14%, according to Messari. As a result, there is ample space for the ether stake rate to increase. The quantity of ether invested in relation to the entire supply of the coin is known as the ether stake rate.
Will there be a mass sell-off after Ethereum’s Shanghai upgrade?
The Shanghai upgrade provides investors with the first chance to release their ETH. Some of the ETH have been staked since 2020. After two years, more than 15.5 million ETH worth around $19 billion, is currently locked at press time.
Staked Ethereum rose at the same time that exchange balances dropped. Since Ethereum’s exchange reserve is now in a downward trend, sell pressure is low.
Following the successful switch to a proof-of-stake method, the overall supply of Ethereum began to decrease. Following the Shanghai hard fork, the dynamics of supply and demand are anticipated to change even more. Additionally, the price of ETH is expected to become volatile.
With a large amount of ETH about to be unlocked, there is a possibility of a mass sell-off. However, it is also possible that investors may continue to stake their ETH.
At press time, Ethereum (ETH) was trading at $1,216.23, up by 0.1% in the last 24 hours.