Planned Ethereum upgrade will unlock $30 billion in crypto tokens

A planned upgrade to the Ethereum blockchain called Shapella will enable users to now withdraw staked Ether tokens from the blockchain.

Christopher McFadden

| Apr 12, 2023 09:38 AM EST

Created: Apr 12, 2023 09:38 AM EST

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The upgrade, called Shapella, will let users unstake Ether.

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A software upgrade allowing investors access to more than $30 billion of digital tokens is scheduled for the second-largest cryptocurrency, Ether, on April 12. The upgrade to the Ethereum blockchain, called Shapella, will mean that investors can redeem an offshoot of Ether tokens they have deposited in exchange for interest on the blockchain network during the previous three years.

Shapella, a combination of the words Shanghai and Capella, will modernize the code on the execution and consensus layers (the beacon chains), the two "mainnet" layers of Ethereum. "Since The Merge, ether staking has been a one-way system. You can stake Ether, but you can't withdraw it. Shapella's goal is to fix this and enable validators and users to unstake their Ether on the network," explains The Block.

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With the new upgrade, thanks to this essential upgrade, users will be able to access and maybe unstake more than 18 million ETH staked on the beacon chain, Ethereum's consensus layer network. According to data company Dune Analytics, these so-called "staked ether" tokens currently comprise around 15 percent of all ether tokens and are valued at about $31 billion. A tweet from Tim Beiko of the Ethereum Foundation, a group representing the Ethereum network, said the upgrade is scheduled for roughly 22:30 GMT.

Investors have projected that the modifications will cause Ether's volatility to increase. Some predict that a wave of selling caused by large redemptions could drive down the price of Ether, which now has a market cap of approximately $230 billion, second only to Bitcoin in terms of value.

It's happening 🎊

Shapella is scheduled on mainnet for epoch 194048, scheduled for 22:27:35 UTC on Apr. 12, 2023 📆

Client releases compatible with the upgrade are listed in the announcement below 👇https://t.co/I0hSv9lnjz
— timbeiko.eth ☀️ (@TimBeiko) March 28, 2023

"The release of this previously unrealized investment may lead to significant downward price pressure if it is immediately liquidated," Deutsche Bank analysts said in a note.

If the previously unrealized investment is quickly liquidated, Deutsche Bank analysts warned that this could result in "significant downward price pressure."

This is not the only major update for Ethereum in recent months either. In its most recent major update, Ethereum substantially lowered its energy consumption in September, a move that its supporters claimed would give Ethereum an advantage as it strives to overtake Bitcoin.

While Bitcoin has increased by more than 80 percent this year, Ether has only risen by slightly less than 60 percent. After a brutal 2022 that saw the crypto market lose trillions of dollars, the market has recovered in 2023 on hopes that the pace of central bank interest rate increases is decreasing.

Decentralized finance systems, which provide financial services without using conventional sector gatekeepers like banks like Ethereum, have become increasingly popular. However, it is still hardly ever utilized in traditional finance or commerce.