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What the Shanghai Upgrade means for Institutional Participation

February 14, 2023

The Ethereum Shanghai Protocol Upgrade marks the final chapter in the Ethereum proof-of-stake vision. Get ready for a sea of change, as 16.4 million and counting staked ETH ($26 billion) become eligible for withdrawal in late March.

What does that mean for institutional adoption and the broader financial ecosystem emerging on Ethereum infrastructure?

While the upgrade allows for withdrawals, the trend points rather upward. With the increasing number of ETH being staked post-Merge and likely to expand post-Shanghai, along with growing adoption of the Ethereum network and a rising ETH price, Ethereum staking is positioned to become a trillion-dollar industry.

At Staking Rewards, we're thrilled to announce our upcoming event, "Institutional ETH Staking Post-Shanghai." Join us on March 14th, 2023, at 10:00 AM EST as we gather top industry leaders to discuss the future of Ethereum staking.

Ethereum staking has the potential to become the risk-free rate of a decentralized financial ecosystem; it's a must-attend event for any financial institution looking to stay ahead of the curve.

The Shanghai upgrade massively de-risks staking, thus making it increasingly attractive to institutions wanting long-term bets on the blockchain ecosystem.

The Ethereum ecosystem continues evolving. The upgrade is set to change the trajectory of Ethereum’s Future forever. The impact of this upgrade on institutional staking is crucial to understand for any institution considering staking.

With "Institutional ETH staking Post-Shanghai," we've invited some of the brightest minds in the industry, including Ethereum researcher Justin Drake, SSV Network, Obol, Rocket Pool, Bridgetower, Alluvial, Stakewise, Bitcoin Suisse, ConsenSys Codefi, Attestant, Eigenlayer, and more. These experts will delve into the future of ETH staking, institutional support for network decentralization, ETH liquid staking, making staking compliant, and the opportunities and impacts of withdrawals post-Shanghai.

ETH staking is an exciting and rapidly evolving area, and this event will be a valuable opportunity for anyone interested in understanding its impact on institutional staking.

If you are considering staking and want to hear from industry leaders, we encourage you to join us for one of the most critical conversations of the year in staking. Register now for free and join us on March 14th, 2023, to learn about the impact of the Shanghai Upgrade on Institutional Ethereum Staking!

Now stay with us as we dive into On-Chain Staking Data for Ethereum ahead of Shanghai.

Curious what returns look like for ETH stakers? Read the full article.

Key Takeaways From the Full Article

  • The Shanghai Upgrade de-risks ETH staking as it improves liquidity and reduces lock-up requirements by initiating the withdrawal process

  • Institutions are likely to reduce the risk profile of ETH staking given withdrawal functionality and, in the best case, may see ETH staking rewards as a risk-free rate within a decentralized financial ecosystem

  • Regulatory clarity will further accelerate institutional adoption in tandem with the Shanghai Upgrade as regulatory guidelines are adequately established for institutions to feel comfortable enough to devote capital, resources, and time to staking operations

  • Staking regulatory issues currently revolve around businesses providing retail-facing staking services that change staking rewards beyond network-determined yields and thus face securities issuance questions. These likely won’t negatively affect institutions looking to run ETH validators themselves

  • Staked ETH and validator count continue to grow with revitalized momentum after the Merge in September 2022

  • Despite narratives concerned about sell pressure when withdrawals begin post-Shanghai, holders continue to stake more ETH pre-Shanghai

  • Of the 16.4M staked ETH, 59% of stakers are in the red, and 40% of them are down over 40%

  • The $1.5k to $1.7k ETH price range is vital as a significant portion of stakers initially staked tokens within this range

  • Staked ETH returns (relative to price when staked) range from -80% to 240%

  • Institutions are likely to participate in ETH staking if the Shanghai Upgrade is successful, regulatory clarity continues developing and doesn’t affect validators, and if ETH doesn’t face significant sell pressure post withdrawalsShare

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