Shanghai is right around the corner. Starting April 12, 18M Eth (~$32.5B) will start to unlock, marking the first time in history that users are allowed to withdraw their staked ETH.
This dashboard will find the relevant metrics about the Shanghai upgrade and also the merge in 2022.
Introduction
In this analysis, we will delve deeper into the potential impact of the Shapella hard fork on the LSD market. With the ability to withdraw staked ether, the network's security will rely more on the reputation of the LSDs, which could lead to a shift in market share. Finally, we will forecast what will happen based on our findings.
Shanghai Upgrade
The backwards-incompatible Shapella hard fork, also known as the Shanghai upgrade, is set to take place at 12th April and will allow users to withdraw their staked ether. The market's remaining concern is that the approaching unlocking of ETH deposited in the network to increase security in exchange for rewards would cause some token holders to rush to exchanges to dump their tokens.
Some analysts believe that the subsequent rise in selling pressure could be worth several billion dollars.
Liquidity Staking Derivatives (LSD)
LSDs (liquid staking derivatives) let staked asset holders exchange and transfer their stake without unstaking and withdrawing their tokens. This means trading or using staked ETH (or other tokens) without waiting for the staking time to end or losing the staking incentives in Ethereum.
Traditional staking locks tokens for a set time, preventing their use. Staked tokens can be used as collateral to generate liquidity or for other uses while still receiving LSD staking advantages. This is useful for investors who want to use staked tokens as collateral for borrowing or trading without losing their staking earnings.
Ethereum LSD initiatives include Lido Finance and Stafi. Staking tokens yields liquid tokens that can be swapped and used without unstaking the underlying assets.
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