$598 million worth of ETH stuck in the network – Upgrades needed to withdraw

On Apr 16, 2023

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Ethereum developer’s executions of the Shapella upgrade show the world that the key parts of $252 billion could be swapped amidst transactions. This amazing feat is second only to the merge upgrade.

But that is not the case for the 18.5% of Ethereum network validators who are missing their correct credentials.

Nansen analytics drew data stating that Shapella’s benefits are yet to reach 106,219 validators who are holding 284, 286 Ethereum. In terms of today’s prices, that amounts to $596 million (1 ETH is $2091 at press time)that can’t be withdrawn from the system.

Credentials updates are required to initial the withdrawals.

Updating the Credentials is a Lengthy process

While automatic, the update process is enabled by the network scan, which adds extra wait time for anyone who is relying on the non-updated nodes.

Investment firm Galaxy stated that it might take about 100 hours for the network to run an update on the withdrawal credentials for an entire validator set.

That equates to about four days. While not long, this delay can bring bearish sentiment, leading Ethereum to lose its foothold over the $2k mark that it has attained for the first time after May 2022.

The network scan also has a list of validators who are going on partial exit or full exit

What is the partial exit? It is a signal by a validator who seeks to withdraw their staked tokens. Since 32ETH is the minimum requirement to become a validator, anything above this amount is counted as a staking reward.

On the other hand, a full exit is for validators which want to exit being validators, which would mean unstaking the required 32 ETH as well.

Upwards of 30k Validators are Ready to Fully Exit

The list of validators poised to exit fully is huge. 31,166 validators are planning to exit the space, which would mean the unstaking of over 1.1 million Ethereum tokens.

That has worried the cryptocurrency crowd as unstaking fully may directly funnel into selling all the tokens – which necessarily would mean stakers exiting not just as validators but their position on Ethereum. The likely sell pressure it may create might plunge Ethereum.

However, the choice to unstake is not necessarily by choice. Among the validators opting to exit fully is Kraken, a prominent cryptocurrency exchange in the United States, which has been asked by the regulatory authorities to shut down its staking facilities. Note 50% of those stakers belong to Kraken alone.

Shutter of Staking Facilities Might Have a Negative Impact on ETH Price

Shanghai upgrade brought good news to the crypto space, but the number of validators opting to fully exit means that Ethereum is not out of the woods yet.

As exchanges turn off their staking services, investors will be bereft of options. One of those may be selling, which would be an opportunity for some since many have been holding the assets for more than 2 years.

That might create a bit of pressure on the ETH price.

But others might use their full0-exit positions to update their validator setup before connecting back to the Ethereum network. Individual validators and ETH hobbyists may follow this path.

The need for an upgrade has people asking questions about what Lido Finance and Rocketpool, as well as other leading liquid staking platforms, would do in this situation.

Reports say that these platforms have signaled that upgrading won’t be an issue for them. In fact, Lido Finance recently announced its first credential update, which was a success. And Rocketpool has rolled out its Atlas upgrade, which makes credential rotation easier for users.

Ethereum Price Still Holding Strong Above $2k Despite a Slow Yesterday

Ethereum is currently trading above $2k at $2090, which is a 0.13% drop from its price a day ago. This little downtick is the common volatility of the market, which is likely due to the stuck assets on the Ethereum blockchain after the upgrade.

Ethereum has been moving almost $200 above its 20-day moving average and, with the current RSI of 72, is in the oversold zone. While one sect of crypto enthusiasts is preparing for a drop-off, others are still rallying, hoping that Ethereum will reach past the $5k mark by the end of 2023.

But the uncertainty is still prevalent across the board. That is why it is better to invest in new cryptocurrencies like Love Hate Inu that are yet to be listed on the cryptocurrency exchange. These assets’ multi-stage presale allows early movers to make multi-x gains before the listing begins. Check them out today to get started.