The recent Shapella hard fork on Ethereum’s Beacon Chain has seen an unprecedented surge in withdrawals, with over 1 million Ether (ETH) worth $2.1 billion being withdrawn within the first four days, as per data from beaconcha.in. This comes as a surprise to many in the Ethereum community, as predictions earlier estimated much lower withdrawal numbers.
The withdrawals were made through 473,700 withdrawal requests, with April 15 recording the largest withdrawal day at 392,800 ETH. Notably, nearly 87% of the active validators, or 469,000 out of 540,000, were able to withdraw their staked Ether. However, instead of being sold off, a significant portion of the withdrawn Ether is being restaked back onto the Beacon Chain, as validators are looking to compound their interest, according to Lachlan Feeney, CEO of blockchain consulting and development firm Labrys.
Feeney believes that the Shapella hard fork is a “massive de-risking event” for Ethereum, and over the medium to long-term, it will likely result in more, not less, ETH being staked. He anticipates that Ether staked on the Beacon Chain will reach a record high in the near future, further strengthening Ethereum’s consensus level.
Wheb Kraken’s staking services closed down, it may have contributed to the higher withdrawal figures, as investors who were staking on Kraken may have moved their funds to other entities to restake on the Beacon Chain, as noted by Markus Thielen, Head of Research at digital asset platform Matrixport. Thielen also expects the positive price action to cool off in the coming week due to increased selling pressure but believes that the Shapella hard fork will ultimately attract more institutional investors to stake on Ethereum.
The 1 million milestone of Ether withdrawals dofrom the Beacon Chain is a significant increase from earlier predictions by blockchain intelligence firm Glassnode, which estimated only 170,000 Ether would be unstaked after the first week of Shapella. On-chain analytics firm Nansen slightly overshot the mark, predicting 1.4 million Ether would be withdrawn in the initial days of the hard fork.
Repercussions of the Shapella hard fork go beyond just the immediate withdrawals and restaking of Ether. It highlights the growing interest and participation of institutional investors in the staking ecosystem of Ethereum, indicating a maturing market. It also underscores the continued demand for liquidity of staked positions, with investors looking for more visibility and flexibility in managing their staked Ether.
Shapella hard fork has brought significant attention to the metaverse and the crypto sector, with Ethereum’s Beacon Chain experiencing unprecedented levels of withdrawals and restaking. While short-term price fluctuations may occur, the long-term impact is expected to be positive, with more Ether being staked and Ethereum’s consensus level further strengthened.