How will the Shanghai upgrade impact ETH’s price?

The next major ethereum upgrade Shanghai Is just a few days away this hard Fork Will allow ethereum validators to Withdraw assets that have been staked to Secure the network that means almost 18 Million eat or about 15 percent of the Total Supply will be available for Withdrawal Shanghai will likely make it Staking more attractive and draw Additional Capital into the ecosystem But in the short term the sudden Unlocking of such a large amount of heat Could send markets into turmoil to Understand the implications of the Shanghai upgrade and how better prepared For it I talked to ethereum researcher Vivek Rahman I'm Giovanni on this show We challenge the ideas that shape the World of crypto in each episode we Assess a crypto narrative a Macroeconomic Outlook or a potentially Disruptive technology only the most Solid ideas will make it to the other Side this video is sponsored by swell Swell is a non-custodial eat liquid Staking protocol designed to optimize Yield in D5 First of all vivec could you tell us Briefly what is the shagai upgrade and Why is it so significant So the Shanghai upgrade is I almost view It as part two of the merge or like the The part of the merge that's Easier from an engineering standpoint

But very very necessary in order for Staking withdrawals to be unlocked the Ethereum emerge was one of the biggest And most important events I think in Crypto history it made it ethereum into A sustainable blockchain both from an Economic standpoint environmental Standpoint Um it switched the engine to prove the Stake and it's been working phenomenally But the issue is because the ethereum Merge was so complicated it was sort of Split into two phases if you want to Call it that where the switch to proof Of stake was but was the main event but They're still right now about 16.5 Million eth that were staked um in Basically one way and those need to be Enabled for withdrawals and that was the Second part of the upgrade Around 14 of the overall supply of heat East being staked so we are talking About avoid significant amount of heat That will be available for withdrawal so A lot of people are closer that once This it will be withdrawn there will be People tapping it on the market and that Will cause price medical price action What do you think about those concerns It's I understand the concern it's it's Very valid and especially in a bear Market people Um uh want to look for reasons for for Each price to potentially go down I

Think heat staking becoming enabled Actually is counter but it's a counter Balancing effect because it also De-risks the eth investment in a Tremendous way I think a lot of Institutions that previously could have Looked at each staking Um especially Trad fire institutions Institutions aren't crypto native they Don't know or aren't as close to Ethereum community Um they'd say well if staking is a One-way transaction and we want to Access each stake and yield but we can't Withdraw they would not actually have a Mandate to or capacity to do that which I think makes a lot of sense so Yes there's going to be eat for sale Because some people that staked will Probably want to unstake some people That earned staking rewards will want to Sell their staking rewards to to pay Taxes or we've had a bear Market Etc but There's also going to be and it's Impossible to how much is me a Counterbalance of new people coming into State eat Um because now it's stakeable it's it's Unstakeable and that's that's very good Right I mean that that's good for Blockchain security the more the more Eth or the more native Bruce stake asset That state the higher the cost to attack The chain so what do you think is about

To be price Dean or what sort of uh Price action do you expect from me to do You think it's going to be like uh by The rumors sell the newest type of event So short term uncertain maybe some Volatility and maybe some downside Um long term I think that having eth be Stakeable and unstate and then being Able to withdrawn Opens the door for a lot more eat to be Staked instead of 14 I would say maybe 25 30 which means a lot more East being Locked up Um which is good for each price so from A flows perspective I actually do think This is going to end up being a Long-term positive just to remind our Audience you would normally require 32 East in order to participate in staking Fortunately there are liquidity pools Which allow users to do liquid staking So you can stake any amount of eth and Participate in the network uh paying a Fee to the the platform so a lot of People are concerned about the growing Influence of a few of this liquidity Pools for example Lido the largest One Controls around 75 percent of the whole Ethereum liquid staking market so some People are concerned that this Centralization could create some Vulnerabilities for the ethereum network So are you concerned about this and how Is the Shanghai upgrade gonna impact on

This specific aspect Lido does control a Lot of stake deed and um and people Worry about Lido become a centralization Factor I actually think and I'll back it Up by just the amount of products that Are launching since withdrawals are Going live with Shanghai a numerous Amount of new staking protocols have all Emerged or are emerging and a lot of Them have been waiting for withdrawals Because lydo did the hard part rockefell To the hard part of saying okay let's Let's do liquid staking but not have Withdrawals and sort of just have a Secondary Market Um for liquid stake tokens so instead of Going through that complexity I think a Lot of Protocols are waiting and I think We're gonna see a flourishing ecosystem Of liquid staking protocols that are all Competing each other Um which is a very good thing I think a Will see more competition competition Breeds decentralization and B I think Lido's share will will In liquid staking will fall as a Percentage there's so much excitement Around the Shanghai upgrade here is a Quick video from our sponsor and don't Forget to join us next Wednesday for our Swell AMA on how to maximize your eat Yield post Shanghai Foreign [Music]

[Music] Number of community members were Complaining about the fact that the Staking process was actually too Difficult for the average user so what Is the state of the basically user Experience of staking and do you think That the shakai upgrade will Bring some improvements on that aspect Ultimately I think everything in the Credibility ecosystem needs to be one Click accessible if crypto is not easier To use and easier to access than the Traditional Financial system then why Would anyone ever switch Um we're not supposed to add technical Complexity we're supposed to abstract That away so the answer is going to be For liquid staking the closer it is to One click staking the more users will Get and I think a lot of people are Working on that um there's wrappers Around Lido there's there's different Routers there's different Diversified Liquid um staking pools that are liquid Staking token pools that are starting so That will improve accessibility and then Exchanges are a genre so yeah I mean Coinbase is has honestly coinbase is one Of the most has been one of the most Crypto native defy Um uh biggest cheerleaders of D5 despite Defy could cannibalize their business Debuted as a positive sum game so the

Fact they're creating CBE making it easy To stake and unstake uh with one click Um that's all very positive for the Retail user for users that want to um Create full nodes Um that want to create full validating Nodes with 32e the process still is Complicated but there's tooling coming Out there's there's Um sort of like router boxes you can buy That that are one click to set up so the Tooling is getting easier and easier to The point where at the end of the day How it should be is either click a Button and your laptop can turn into a Validated node or Um install like one small box the size Of a router and just plug it in that can Be a validated node we're going that Direction as you mentioned it's very Interesting this uh new narrative that Is getting a lot of tractionality which Is the narrative reps of liquid staking Derivative so when you stage your teeth You get an exchange these other token Which you presents this the stake that You put on the on the liquidity pool and You can use it in order to uh get more Yields somewhere else or use it as a Collateral or somewhere else in device So that basically you can put it to work And not just having the the your um your Your each stake there without any chance To use it besides earning yields on it

So this is one of the biggest narrative Probably we're gonna see this year Especially after the shark eye upgrade What do you think and that that's the Magic of of D5 I mean that the whole Point of D5 is to give Financial tools To normal people that only banks and Institutions have so the fact that Um I as an individual can stake my eat But get a liquid representative which is That liquid staking token and taking the D5 and use it as collateral and borrow Stable coins for example or um or lend It on a platform like Ave Um or trade it um to get liquidity the Fact that all that's possible Um through a self-custodial wall and Through permissionless apps that's the Real Innovation so I mean yeah liquid State tokens are just the one of the Best representations of why crypto Creates all these like Legos and Building blocks that give more financial Options to users as we know one of the Main issues affecting the ethereum Blockchain are high fees the ethereum Merch didn't have any impact on the Transaction fees for the average user as Well as understand the Shanghai upgrade Is also not going to fix this issue Right the next hard Fork after the Merger supposed to have two major things Um one was called eof is ethereum object Format that that's first solidity

Developers to sort of change the solid Decode Um code base rather uh that is important But wasn't critical to include in this Current Um Fork the second which was also being Developed in parallel was called eip4844 And what that does is make the costs That Roll-Ups have to pay to eat much Much lower so it would it would reduce Transaction fees for Roll-Ups Tremendously which would reduce Transaction fees for end users Um that's the next Frontier for ethereum We need to lower fees and onboard more Users but both the eof and the 4844 Implementation were actually removed From Shanghai for the exact reason that We don't want to keep the language Withdrawals I mean a lot of users have I Mean 16.5 million eth which is about 26 A little over 26 billion dollars of eth Were locked one way in the staking Contract the people that want to Withdraw it should be able to withdraw And I mean people have been waiting Patiently since like you said December 2020 Um that is first priority so it just Sort of shows the community alignment Community governance process to Prioritize withdrawals I think that After withdrawals are done and after Emerge is pretty much consummated the

Entire narrative needs to shift fully to Scaling and reducing fees and onboarding Users so it's a different conversation But adding more apps adding more users Especially during the spare market and Creating real use cases is the way Ethereum will win and um that's that's Hugely important so that's coming up Next but it's not part of Shanghai Um to not delay the process be back Thanks for that for coming over show and Yeah that's stuck again after Shanghai And uh yeah let's keep in touch for the Next uh Milestones of the ethereum Roadmap Absolutely thanks again for having me It's going to be again another huge year For ethereum I'm glad you guys are Focused on it


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