Illustration (source: freepik.com)

#Ethereum Shanghai Upgrade is just around the corner, and millions of #ETH is about to enter the market. Will this lead to a drop in ETH's price? Is it a nightmare await for ETH holders?

TL;DR:

Ethereum Shanghai Upgrade is planned to happen on April 12th 2023, this will allow ETH stakers to withdraw their staked ETH

Almost 18 million ETH staked, or equal to around US$32 billion

There are 2 options to withdraw the staked ETH: partial or full

Partial, stakers can withdraw only the interest, possibly 1 million ETH withdrawable for this option

Full, stakers can withdraw all of their staked ETH, but with the network maximum capacity of 50.400 ETH each day

57% of ETH stakers are liquid stakers through Liquid Staking Derivatives platform providers

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The Ethereum network transition from the Proof-of-Work (PoW) consensus mechanism to the Proof-of-Stake (PoS) evolution is ongoing to improve the network's scalability, energy efficiency, and security. This transition began with The Merge on September 15th, 2022.

Another major Ethereum upgrade operation is scheduled for this month, specifically on April 12th, 2023. This upgrade is called The Shanghai Upgrade, and it is rumored to significantly affect the price of ETH.

Why is that? Through The Shanghai Upgrade, there will be a major change in the Ethereum network and ETH. The change is that ETH stakers will be able to withdraw or unstake their staked ETH.

Since December 1st 2020, ETH can be staked on the Beacon Chain as the requirement to be a validator on the Ethereum network, with minimum 32 ETH to be staked. Beacon Chain is a new layer on the Ethereum network designed as "validators layer", the layer where transactions being validated and new blocks being created on the Ethereum network.

Until this day, ETH stakers could not withdraw and unstake their locked ETH back, but with the upcoming Shanghai Upgrade, stakers will be able to unstake and withdraw their staked ETH. This raises the question of how the Shanghai Upgrade will affect ETH's price. Will the upgrade cause a depreciation in ETH's price?

What it is Means for Ethereum Shanghai Upgrade?

Based on the data from Ethereum's official website, ethereum.org, at the time of writing this article, the total amount ETH being staked almost reach 18 million ETH, equivalent to around 32 million United States Dollar. This means that a significant amount of ETH may come into the market in the near future.

However, it is important to note that the staked ETH after the Shanghai Upgrade cannot be withdrawn all at once. This should help protect the ETH price and hold back selling pressure that might otherwise occur if all staked ETH were withdrawn simultaneously.

ETH staking statistics source: ethereum.org/en/staking/ (accesed on April 4th 2023, 5:30 AM UTC)

According to Binance Research, validators have two options for withdrawing their staked ETH: partial or full withdrawal.

With partial withdrawal, validators can withdraw only the interest earned on their staked ETH, without the original staked capital. This means that up to 1 million ETH (~US$1.8 million) could potentially enter the market through this withdrawal option.

Alternatively, validators can opt for the full withdrawal option, which allows them to withdraw both their staked capital and interest. However, the Shanghai Upgrade has been designed to limit daily withdrawals to 50,400 ETH (~US$91.3 million).

As a result, there will only be US$91.3 million worth of selling pressure on the ETH price each day from the full withdrawal option. Mathematically, this amount would only affect about 1% of ETH's price each day based on Ethereum's market cap in the last 24 hours.

It is worth noting that the majority of ETH stakers, which is 57% of them, are liquid stakers through Liquid Staking Derivatives (LSD) platform providers such as Lido, #Binance , Coinbase, and others.

Liquid Staking is a process of staking or locking coins, in this case, ETH, through #LSD platforms. Stakers will receive a token that has the same value as their staked ETH as a derivative ETH token. This allows stakers to use the derivative token for many things while still participating in validating the Ethereum network.

ETH stakers composition (source: #BinanceResearch )

LSD platforms have been existed long before the Shanghai Upgrade become the main topic and have been become the main option for many ETH stakers around the globe. Therefore, it can be said that this group of stakers - liquid stakers - do not have a special reason to sell off their ETH post-Shanghai Upgrade, as they would have already done so in the months before.

Conclusion:

With the implementation of those two withdrawal options, it can hold back the selling pressure post-The Shanghai Upgrade. However, only 43% of the ETH stakers are illiquid and waiting for the upgrade because the liquid stakers would have already sold their derivative ETH tokens long before.



DISCLAIMER:

This article is just for information purposes only, not any financial advice. This article may be used as a reference but please always Do Your Own Research (DYOR) based on your own personal preferences, especially when it comes to spending money. Mad's Crypto Corner is not responsible for your own financial decisions.

Gas usage on the Ethereum network provides valuable insights into user demand and the major narratives that have shaped the ecosystem. By analyzing the trends, we can identify four significant storylines that have influenced Ethereum's journey, often resulting in new all-time highs for ETH prices during their peaks.

Let's explore these narratives:

🟢 Initial Coin Offerings (ICOs):  ICOs, the crypto equivalent of IPOs, reached their zenith in 2017 and 2018. During this period, up to 40% of gas usage was attributed to ERC-20 token transfers. Although demand for ERC-20 token transfers has declined, it remains notable today due to the popularity of Memecoins and new token distribution methods like Yield Farming and Airdrops.

🟡 Decentralized Finance (DeFi):  The rise of DeFi in 2020 promised to create on-chain financial primitives and instruments without traditional intermediaries. It experienced its peak usage from June 2020 to 2021, accounting for approximately 30% of gas usage. The DeFi wave continues today, albeit at a lower intensity.

🟠 Non-Fungible Tokens (NFTs):  NFTs introduced unique representations of digital or real-world assets. While they have existed for years, it was in mid-2021 that they gained mainstream awareness. NFT demand fluctuated in 2022 but has recently seen a resurgence due to various factors (refer to our report in WoC 09).

🔵 Stablecoins:  Stablecoins, particularly those pegged to the US dollar, have witnessed a surge in user demand since mid-2020. The decrease in gas usage from stablecoin transactions reflects a shift in utility rather than a decline in demand. Stablecoins are now predominantly used for hedging and as a store of value rather than for direct payments.

📝Overview

An interesting pattern emerges, where each new application experiences a boom-bust cycle, driving its gas consumption to around 30% to 40% of the total. Subsequently, there is a gradual decline to a baseline level of approximately 8% of gas consumption for these major application types.

🎯 Conlusion

Understanding these cycles and narratives helps us gain insights into the evolution of Ethereum and its various use cases. As the network continues to evolve, new narratives are likely to emerge, shaping the future of decentralized applications on Ethereum.

#ETH #narrative #LSD #staking #crypto2023

Hello, ninja world! A groundbreaking protocol is making its debut on Injective, and it goes by the name Gryphon. Picture this: a fusion of DeFi titans Lido and Maker, Gryphon is here to elevate the Injective ecosystem to new heights.
What is Gryphon?
Gryphon is a decentralized #LSD (Liquidity Staking Derivatives) protocol designed specifically for #Injective . Going beyond traditional staking, Gryphon integrates borrowing and lending features, enabling users to optimize their staking strategies and unlock the liquidity potential of their staked assets.
Why Gryphon?
Layer one ecosystems often face challenges related to capital inefficiency, leading to locked funds and limited utility. Gryphon addresses this by allowing users to borrow against their staked assets, opening up new possibilities for liquidity use.
Key Features of Gryphon’s Testnet Launch
Borrow: Use staked assets like INJ, wETH, or wBTC as collateral to mint nUSD. Stake nUSD to earn a fixed 5% yield, and pair USDT/USDC with nUSD to earn additional Gryphon rewards.Stake: Stake nAssets to receive incentives and rewards, amplifying your overall staking rewards. Gryphon facilitates increased capital efficiency and flexible deployment.
Why Build on Injective?
Injective, as a platform, aligns with Gryphon’s mission to reshape the financial system. It offers advantages at every layer of the stack, optimizing dApps for distinct advantages and unlocking a new design space.
Staked $INJ as the Initial Supported Asset
Gryphon starts with staked $INJ as the initial supported asset for borrowing, providing users with a familiar and valuable asset to engage with Gryphon’s features.
Conclusion
Gryphon’s Vision for Injective Gryphon aims to become the leading on-chain lending market for staked assets within the Injective ecosystem. Seamlessly integrating liquidity across multiple chains without the need for cross-chain operations, Gryphon introduces a robust native money market to enhance staking strategies.
Experience More Capital Efficiency
Gryphon enables you to move your funds wherever they make the most sense for you, offering increased capital efficiency and flexible capital deployment.
Join Gryphon on Injective
Embark on a high-stakes adventure with Gryphon, where ancient myths meet modern strategy. Gryphon is set to redefine LSD staking on Injective, providing users with limitless possibilities for their staked assets.
#crypto2023 #CryptoEcosystems $INJ

Due to the complexity of the protocol, I will be breaking this down into two threads. In part 1 we will go through:

How Pendle works

Understanding PT/YT

vePENDLE

Ecosystem+adoption

I. How pendle works?

Pendle is a yield protocol that splits up a yield-bearing token into two components

with a fixed maturity date:

PT: Represents the principal of the underlying token

YT: Represents the yield accrued for the underlying asset

At maturity, PT is redeemable for the underlying asset, and YT is redeemable for the

yield earned by the underlying asset through the duration.

What qualifies as a yield-bearing token?

Proof-of-stake tokens, e.g. $stETH

LP Tokens, e.g. $GLP, $gDAI

Protocol tokens with staking emissions or fee sharing mechanism e.g., $APE ,

$LOOKS.

In TarFi terms, this is analogous to valuing a vanilla bond, which is comprised of

face value redeemable at maturity, and coupon payments throughout the duration

of the bond. The current value is the discounted value of the two components.

A bond’s principal and future coupon payments are discounted based on the time

and discount rate to get the current value of the bond:

PT: Face value

YT: Coupon payments

Take stETH as an example, providing 1 ETH into Pendle, you can get: 1 PT stETH,

redeemable for 1 ETH at expiry (29 Jun) 1 YT stETH, redeemable for the yield

earned for 1 stETH from now - 29 Jun

PT/YT is traded through an embedded AMM, which allows for price discovery

between the two based on future expectations of the underlying token's yield.

II. Understanding PT/YT

Taking the same stETH example, at current prices:

PT stETH = 1735.31

YT stETH = 21.63

Days to maturity = 93 Days

Buying PT stETH is the equivalent to buying ETH at a discount, where in 93 days you

would be able to redeem it for 1 stETH.

Buying at current prices would net you:

(1+ 21.63/1735.31)^(365/93) = 4.95% APY.

Regardless of how much stETH earns in yield over the next 93 days, you lock up

4.95% up front.

Alternatively, buying YT is a leveraged bet on the future yield (until maturity) of

stETH.

Recall that at maturity, 1 YT is entitled to accumulated yield of 1 stETH throughout

the duration.

Should the yield of stETH increase above 4.95%, profits will be magnified.

III. vePENDLE

PENDLE is the native token of the protocol, it can be locked and staked for

vePENDLE, the vote locked token entitled to:

Governance rights

Protocol fees

Boosted rewards

PENDLE can be locked for anywhere from 1 week to 2 years, and decays overtime

until the end of the lock

A key difference between Pendle and other ve-models is that voting for a pool

allows you to earn 80% of swap fees earned from that pool in exchange for directing

emissions to the pool.

Additionally, vePENDLE holders also earns a 3% fee from all yield accrued by YT.

Lastly, if you are a LP in a pool while holding vePENDLE, your emissions and

rewards will be boosted by up to 250% based on your vePENDLE balance.

IV. Ecosystem+adoption

If you've been active at all on CT, you'd see the Pendle is the talk of the town.

However, Pendle isn't your hottest AI shitcoin.

In fact, the team has been building since 2021

Its TVL visibly died down in 2022, but has seen a resurgence over the past 4 months

- I would attribute this to:

LSD Narrative

Arbitrum deployment

#LSD - the original idea behind the project was create yield derivative markets for

PoS tokens, and Pendle has already integrated with @LidoFinance, @ankr, and

@Rocket_Pool

A renewed interest in ETH staking = good for Pendle

#Arbitrum

The biggest catalyst for any non-Arb project is deploying on Arbitrum. With

Realyield running rampant, degens are rushing over to trade the likes of $GLP and

$gDA

I still believe we're quite early to on-chain credit markets. For the most part I think

pendle is still mostly used by speculators (if there's data that says otherwise lmk),

but yield hedging will be an extremely important use case for sophisticated

investors.

Avely Finance has officially launched its liquid staking protocol on the Zilliqa mainnet.

The protocol and stZIL token are live in a beta phase and open to all users on the network, bringing more utility and flexibility to staking on Zilliqa and building a strong foundation for DeFi growth.

Find out more about Avely Finance's liquid staking protocol and stZIL token below:

https://blog.zilliqa.com/avely-finance-launches-liquid-staking-on-zilliqa-mainnet/

#Zilliqa #LiquidStaking #LSD #DeFi #defiprotocols #AvelyFinance