{"id":288328,"date":"2023-01-15T23:00:16","date_gmt":"2023-01-15T23:00:16","guid":{"rendered":"https:\/\/cryptoslate.com\/?p=288328"},"modified":"2023-01-15T19:29:51","modified_gmt":"2023-01-15T19:29:51","slug":"shift-towards-liquid-staking-derivatives-expected-after-eth-shanghai-upgrade","status":"publish","type":"post","link":"https:\/\/cryptoslate.com\/shift-towards-liquid-staking-derivatives-expected-after-eth-shanghai-upgrade\/","title":{"rendered":"Shift toward Liquid Staking Derivatives expected after ETH Shanghai upgrade"},"content":{"rendered":"<p>The Ethereum (<a href=\"https:\/\/cryptoslate.com\/coins\/ethereum\/\">ETH<\/a>) Shanghai upgrade is due to release March, enabling withdrawals from beacon chain and allowing ETH currently staked in ETH 2.0 validators to be unstaked.<\/p>\n<p>With over 70% of ETH stakers currently <a href=\"https:\/\/cryptoslate.com\/staked-ethereum-surpasses-16m-over-70-stakers-at-a-loss\/\">at a loss<\/a> with their ETH inaccessible, the Shanghai upgrade will enable stakers access to their ETH and decide whether to sell at a loss or hold long-term until back in profit.<\/p>\n<figure id=\"attachment_288450\" aria-describedby=\"caption-attachment-288450\" style=\"width: 1800px\" class=\"wp-caption aligncenter\"><img loading=\"lazy\" decoding=\"async\" class=\"wp-image-288450 size-full\" src=\"https:\/\/cryptoslate.com\/wp-content\/uploads\/2023\/01\/glassnode-studio_ethereum-mean-and-median-block-interval.png\" alt=\"Ethereum: Mean and Median Block Interval - (Source: Glassnode.com)\" width=\"1800\" height=\"1013\" srcset=\"https:\/\/cryptoslate.com\/wp-content\/uploads\/2023\/01\/glassnode-studio_ethereum-mean-and-median-block-interval.png 1800w, https:\/\/cryptoslate.com\/wp-content\/uploads\/2023\/01\/glassnode-studio_ethereum-mean-and-median-block-interval-300x169.png 300w, https:\/\/cryptoslate.com\/wp-content\/uploads\/2023\/01\/glassnode-studio_ethereum-mean-and-median-block-interval-1024x576.png 1024w, https:\/\/cryptoslate.com\/wp-content\/uploads\/2023\/01\/glassnode-studio_ethereum-mean-and-median-block-interval-768x432.png 768w, https:\/\/cryptoslate.com\/wp-content\/uploads\/2023\/01\/glassnode-studio_ethereum-mean-and-median-block-interval-1536x864.png 1536w\" sizes=\"(max-width: 1800px) 100vw, 1800px\" \/><figcaption id=\"caption-attachment-288450\" class=\"wp-caption-text\">Ethereum: Mean and Median Block Interval &#8211; (Source: Glassnode.com)<\/figcaption><\/figure>\n<h2>Post-ETH merge<\/h2>\n<p>Back in September 2022, the ETH merge took place in the Bellatrix upgrade. In the process, block validation was taken over by the beacon chain completing the transition from Proof of Work (POW) to Proof of Stake (POS).<\/p>\n<p>The beacon chain is organized by validators who have deposited 32 ETH before being able to begin operations. Currently, the number of beacon chain validators has reached 500,000 \u2014 with a recent burst in new active validators \u2014 with a total of over 16 million ETH staked in the ETH 2.0 deposit contract.<\/p>\n<figure id=\"attachment_288453\" aria-describedby=\"caption-attachment-288453\" style=\"width: 1800px\" class=\"wp-caption aligncenter\"><img loading=\"lazy\" decoding=\"async\" class=\"wp-image-288453 size-full\" src=\"https:\/\/cryptoslate.com\/wp-content\/uploads\/2023\/01\/glassnode-studio_ethereum-proof-of-stake-change-in-active-validators.png\" alt=\"Ethereum: Proof-of-Stake Change in Active Validators - (Source: Glassnode.com)\" width=\"1800\" height=\"1013\" srcset=\"https:\/\/cryptoslate.com\/wp-content\/uploads\/2023\/01\/glassnode-studio_ethereum-proof-of-stake-change-in-active-validators.png 1800w, https:\/\/cryptoslate.com\/wp-content\/uploads\/2023\/01\/glassnode-studio_ethereum-proof-of-stake-change-in-active-validators-300x169.png 300w, https:\/\/cryptoslate.com\/wp-content\/uploads\/2023\/01\/glassnode-studio_ethereum-proof-of-stake-change-in-active-validators-1024x576.png 1024w, https:\/\/cryptoslate.com\/wp-content\/uploads\/2023\/01\/glassnode-studio_ethereum-proof-of-stake-change-in-active-validators-768x432.png 768w, https:\/\/cryptoslate.com\/wp-content\/uploads\/2023\/01\/glassnode-studio_ethereum-proof-of-stake-change-in-active-validators-1536x864.png 1536w\" sizes=\"(max-width: 1800px) 100vw, 1800px\" \/><figcaption id=\"caption-attachment-288453\" class=\"wp-caption-text\">Ethereum: Proof-of-Stake Change in Active Validators &#8211; (Source: Glassnode.com)<\/figcaption><\/figure>\n<h2>New ETH credentials format<\/h2>\n<p>Validators who wish to withdraw their staking rewards must ensure their withdrawal credentials are updated to the new &#8220;0x01&#8221; standardized format. The same prerequisite exists for validators who wish to stop validating or exit their full balance.<\/p>\n<p>Currently, roughly 300,000 validators have yet to update their credentials from &#8220;0x00&#8221; while roughly 200,000 validators have already updated on the beacon chain.<\/p>\n<p>Of the 500,000 total validators, the over 16 million ETH they have staked represents roughly 13% of the total ETH supply \u2014 which will change as time goes on as the result of:<\/p>\n<ol>\n<li>Slashing \u2014 in the event of malicious behavior.<\/li>\n<li>Revenue earned from issuance and fees.<\/li>\n<li>Inactivity leak \u2014 if validators will block or attestations.<\/li>\n<li>New deposits and, eventually, withdrawals.<\/li>\n<\/ol>\n<figure id=\"attachment_288471\" aria-describedby=\"caption-attachment-288471\" style=\"width: 1800px\" class=\"wp-caption aligncenter\"><img loading=\"lazy\" decoding=\"async\" class=\"wp-image-288471 size-full\" src=\"https:\/\/cryptoslate.com\/wp-content\/uploads\/2023\/01\/glassnode-studio_ethereum-proof-of-stake-total-and-effective-balance-copy-copy.png\" alt=\"Ethereum: Proof-of-Stake Total and Effective Balance - (Source: Glassnode.com)\" width=\"1800\" height=\"1013\" srcset=\"https:\/\/cryptoslate.com\/wp-content\/uploads\/2023\/01\/glassnode-studio_ethereum-proof-of-stake-total-and-effective-balance-copy-copy.png 1800w, https:\/\/cryptoslate.com\/wp-content\/uploads\/2023\/01\/glassnode-studio_ethereum-proof-of-stake-total-and-effective-balance-copy-copy-300x169.png 300w, https:\/\/cryptoslate.com\/wp-content\/uploads\/2023\/01\/glassnode-studio_ethereum-proof-of-stake-total-and-effective-balance-copy-copy-1024x576.png 1024w, https:\/\/cryptoslate.com\/wp-content\/uploads\/2023\/01\/glassnode-studio_ethereum-proof-of-stake-total-and-effective-balance-copy-copy-768x432.png 768w, https:\/\/cryptoslate.com\/wp-content\/uploads\/2023\/01\/glassnode-studio_ethereum-proof-of-stake-total-and-effective-balance-copy-copy-1536x864.png 1536w\" sizes=\"(max-width: 1800px) 100vw, 1800px\" \/><figcaption id=\"caption-attachment-288471\" class=\"wp-caption-text\">Ethereum: Proof-of-Stake Total and Effective Balance &#8211; (Source: Glassnode.com)<\/figcaption><\/figure>\n<h2>Liquid Staking Derivatives<\/h2>\n<p>Due to the nature of staked ETH, it is an untradeable asset once staked. As such, numerous providers emerged that allowed ETH to be staked in return for a tradeable asset representing a share of the staked ETH \u2014 known as Liquid Staking Derivatives (LSD).<\/p>\n<p>To date, Lido is by far the largest LSD provider, with a market holdings amount of around 5 million ETH.\u00a0However, currently staking providers such as Lido, Coinbase and Binance control large segments of the ETH market \u2014 revealing issues with centralization.<\/p>\n<figure id=\"attachment_288441\" aria-describedby=\"caption-attachment-288441\" style=\"width: 1280px\" class=\"wp-caption aligncenter\"><img loading=\"lazy\" decoding=\"async\" class=\"wp-image-288441 size-full\" src=\"https:\/\/cryptoslate.com\/wp-content\/uploads\/2023\/01\/eth-2-staked.jpg\" alt=\"Ethereum: ETH 2.0 Total Value Staked by Provider [ETH] - Source: CryptoSlate\" width=\"1280\" height=\"676\" srcset=\"https:\/\/cryptoslate.com\/wp-content\/uploads\/2023\/01\/eth-2-staked.jpg 1280w, https:\/\/cryptoslate.com\/wp-content\/uploads\/2023\/01\/eth-2-staked-300x158.jpg 300w, https:\/\/cryptoslate.com\/wp-content\/uploads\/2023\/01\/eth-2-staked-1024x541.jpg 1024w, https:\/\/cryptoslate.com\/wp-content\/uploads\/2023\/01\/eth-2-staked-768x406.jpg 768w\" sizes=\"(max-width: 1280px) 100vw, 1280px\" \/><figcaption id=\"caption-attachment-288441\" class=\"wp-caption-text\">Ethereum: ETH 2.0 Total Value Staked by Provider [ETH] &#8211; Source: CryptoSlate.com<\/figcaption><\/figure>\n<p style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">As an asset geared towards decentralization, ETH holdings amassed by the aforementioned ETH staking providers lend to the narrative that ETH is becoming too centralized \u2014 and ultimately controlled by companies with the largest holdings.<\/span><\/p>\n<p>With the integration of the upcoming Shanghai upgrade, ETH investors and validators alike will be gearing up to withdraw staked ETH in favor of positions that allow the share and value of their staked ETH to be returned in the form of LSDs.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>The Ethereum (ETH) Shanghai upgrade is due to release March, enabling withdrawals from beacon chain and allowing ETH currently staked in ETH 2.0 validators to be unstaked. With over 70% of ETH stakers currently at a loss with their ETH inaccessible, the Shanghai upgrade will enable stakers access to their ETH and decide whether to [&hellip;]<\/p>\n","protected":false},"author":1398,"featured_media":289066,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[35372,77921,77923,76736],"tags":[],"prediction_market_topic":[],"post_folder":[],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v21.9 (Yoast SEO v21.9.1) - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Shift toward Liquid Staking Derivatives expected after ETH Shanghai upgrade<\/title>\n<meta name=\"description\" content=\"Ethereum&#039;s Shanghai upgrade in March will enable withdrawals from the beacon chain by granting ETH validators the ability to unstake.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/cryptoslate.com\/shift-towards-liquid-staking-derivatives-expected-after-eth-shanghai-upgrade\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Shift toward Liquid Staking Derivatives expected after ETH Shanghai upgrade\" \/>\n<meta property=\"og:description\" content=\"Ethereum&#039;s Shanghai upgrade in March will enable withdrawals from the beacon chain by granting ETH validators the ability to unstake.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/cryptoslate.com\/shift-towards-liquid-staking-derivatives-expected-after-eth-shanghai-upgrade\/\" \/>\n<meta property=\"og:site_name\" content=\"CryptoSlate\" \/>\n<meta property=\"article:published_time\" content=\"2023-01-15T23:00:16+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2023-01-15T19:29:51+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/cryptoslate.com\/wp-content\/uploads\/2023\/01\/liquid-staking.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"1200\" \/>\n\t<meta property=\"og:image:height\" content=\"630\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"Josh O&#039;Sullivan\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:creator\" content=\"@cryptoslate\" \/>\n<meta name=\"twitter:site\" content=\"@cryptoslate\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Josh O'Sullivan\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"3 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"NewsArticle\",\"@id\":\"https:\/\/cryptoslate.com\/shift-towards-liquid-staking-derivatives-expected-after-eth-shanghai-upgrade\/#article\",\"isPartOf\":{\"@id\":\"https:\/\/cryptoslate.com\/shift-towards-liquid-staking-derivatives-expected-after-eth-shanghai-upgrade\/\"},\"author\":[{\"@type\":\"Person\",\"@id\":\"https:\/\/cryptoslate.com\/author\/josh-osullivan\/#person\",\"name\":\"Josh O'Sullivan\",\"url\":\"https:\/\/cryptoslate.com\/author\/josh-osullivan\/\",\"mainEntityOfPage\":{\"@id\":\"https:\/\/cryptoslate.com\/author\/josh-osullivan\/\"},\"image\":{\"@type\":\"ImageObject\",\"@id\":\"https:\/\/cryptoslate.com\/author\/josh-osullivan\/#authorimage\",\"url\":\"https:\/\/cryptoslate.com\/wp-content\/uploads\/2022\/11\/josh-osullivan-300x300.jpg\",\"contentUrl\":\"https:\/\/cryptoslate.com\/wp-content\/uploads\/2022\/11\/josh-osullivan-300x300.jpg\",\"caption\":\"Josh O'Sullivan\"},\"jobTitle\":\"Editor\/Reporter\",\"description\":\"Josh has been writing for a decade and is passionate about mainstream crypto adoption, bringing positive financial change to the masses through crypto and de...\",\"worksFor\":{\"@id\":\"https:\/\/cryptoslate.com\/#organization\"},\"sameAs\":[\"https:\/\/x.com\/joshosullivan01\",\"https:\/\/www.linkedin.com\/in\/josh-o-sullivan-a268b7248\"]},{\"@type\":\"Person\",\"@id\":\"https:\/\/cryptoslate.com\/author\/james-van-straten\/#person\",\"name\":\"James Van Straten\",\"url\":\"https:\/\/cryptoslate.com\/author\/james-van-straten\/\",\"mainEntityOfPage\":{\"@id\":\"https:\/\/cryptoslate.com\/author\/james-van-straten\/\"},\"image\":{\"@type\":\"ImageObject\",\"@id\":\"https:\/\/cryptoslate.com\/author\/james-van-straten\/#authorimage\",\"url\":\"https:\/\/cryptoslate.com\/wp-content\/uploads\/2022\/07\/cryptoslate-james-van-straten-300x300.jpg\",\"contentUrl\":\"https:\/\/cryptoslate.com\/wp-content\/uploads\/2022\/07\/cryptoslate-james-van-straten-300x300.jpg\",\"caption\":\"James Van Straten\"},\"jobTitle\":\"Former Lead Analyst\",\"description\":\"James fervently appreciates data, technology, and trend-spotting. 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