Ethereum’s Shanghai Upgrade Sparks Token Frenzy as Investors Bet Big
The Shanghai upgrade of Ethereum has generated yet another token frenzy, with speculators banking on the upgrade’s success. According to Bloomberg, speculators are increasingly betting on tokens tied to the next Ethereum network upgrade, known as Shanghai.
The much-anticipated upgrade is scheduled for March. It will enable Ether holders to withdraw their staked currencies. Prices of several cryptocurrencies have risen dramatically in recent weeks, just months after the historic FTX crash, which forced analysts to reconsider their most pessimistic predictions for the young crypto market. Liquid staking apps received a lot of attention from investors, with the coins of Lido and Rocket Pool seeing considerable price increases. Such apps enable Ethereum holders to earn interest without having to sell their tokens.
The rapid surge is similar to the one that occurred in September ahead of the much-anticipated software upgrade known as the “merge,” which enabled the second-largest blockchain to convert to a new consensus mechanism known as “proof-of-stake.” According to Henry Elder, Wave Financial’s head of decentralized finance, many are expecting an increase in adoption following Shanghai.
Since early November, when the whole cryptocurrency market witnessed a big slump owing to the collapse of the FTX exchange, the LDO token, which serves as the Lido app’s governance token, has seen a triple-digit surge. Lido is now the most popular decentralized finance platform, with over $8 billion invested in the protocol.
By the end of 2023, when withdrawals are authorized, about one-fifth of all Ether tokens in circulation will have been staked. After Shanghai, it can still take a while to withdraw staked Ether from the Ethereum network.
Although the tokens’ liquidity is probably going to increase, there is a chance that they could become stranded. Additionally, there is a chance that investors who drove up the cost of governance tokens for liquid-staking apps will unload them just before Shanghai goes into effect.
