The Ethereum Dev Team has officially confirmed the launch date for the Shanghai upgrade on April 13.
After the Shanghai upgrade, users who have locked up a minimum of 32 ETH to secure an APY staking bonus of 4-5% will be able to withdraw part of their stake immediately. But those looking to withdraw their entire holdings will have to wait 1 to 36 days, which relieves potential selling pressure. Furthermore, only 16% of ETH bettors are profitable, so why are they selling now?
In fact, for investors, selling ETH now may not make any sense. And the investor profile for ETH holders leans towards rationality and the long-term outlook.
Ethereum is a blockchain that sells block space for applications. Applications must pay for transactions in the blockchain's native currency: ETH.
The demand side of the transaction depends on simple network effects, the more applications, the more users, the more demand for ETH. And this is because the Ethereum network is the oldest decentralized smart contract ecosystem out there.
The Ethereum and Bitcoin networks were analyzed by researcher Ken Alabi in a 2017 paper. “The analysis shows that the networks are modeled fairly well according to Metcalfe's Law, which determines the value of a billion nets. proportional to the square of the number of nodes or its end users.” This means that adoption can increase the value of any particular network exponentially.
On the supply side, ETH is issued as compensation to independent actors running network nodes, and this amounts to 671,000 ETH per year. However, thanks to a new burning mechanism that destroys a small amount of ETH per transaction (by depositing it in a wallet that can never be withdrawn from there), the ETH supply is actually shrinking despite issued token.
Ultrasound.money is a real-time burn monitoring dashboard that shows that the supply of ETH has been shrinking for months (it should be noted we are in a Bearish), imagine what This will happen when demand picks up again. In fact, despite the Bearish, transactions on Ethereum are maintaining a solid uptrend thanks to innovations like NFT and DeFi decentralized finance.
Volatility should be resolved slowly as the effects of network adoption play out. The more people join the Ethereum network, the more the value of ETH increases, leading to more adopters. As market capitalization increases, there will be larger and larger market swings to shake the boat, reducing large deviations in price.
The best crypto regulators can hope for is to slow the pace of adoption. But most governments don't have much incentive to support this approach because: firstly, cryptocurrency is, in terms of community, driven by Millennials and Generation Z, so it will be a matter of election. in the coming years, and second, it will drive corporate innovation beyond the national borders.
Even as the US is tightening its grip on crypto, Dubai, Hong Kong, and the UK are prepared to attract crypto companies from the outside. And even when regulators put ETH into a stock portfolio, anyone can buy securities in minutes using a mobile app.
The upcoming Shanghai upgrade will be followed by a more complex upgrade that will reduce fees on the Ethereum network, making it faster and even more user-friendly. These are really the innovations that users need and investors are most likely to find the incentive to increase their positions.
VIC Crypto synthesizes
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