Charles Hoskinson, the founder of Cardano (ADA), recently called Ethereum the “Hotel California of Crypto”.
What could make Ethereum a place where you can “check in anytime, but you can never leave?” Well, let’s dive into the situation surrounding staking and the recent merge.
As Ethereum moved to Proof of Stake, with the ETH 2.0 Merge, it was decided that stakers would be able to start unstaking after the Shanghai update. Okay, so a slight delay in unstaking? What’s the big deal?
Well, there is currently no set date for the Shanghai update. This means stakers are in limbo, until it occurs. With tens of billions of dollars locked up in staking, this represents a major issue. Furthermore, after the update occurs, to prevent mass dumping of ETH causing security issues, there will be a withdrawal queue for staked ETH.
This means that only a fraction of a percent of the tens of billions of staked ETH will be able to be withdrawn each day, after the Shanghai update.
So for those who have large sums staked, those funds may be locked up a lot longer than expected. While this may not cause long term damage to the Ethereum network, it very well could cause significant short term side-effects.
So keep a weather eye on the horizon and keep your non-custodial wallet secure, while we wait to see how this all plays out.
Will ETH take a hit? Will Eclipse’s IsekaiMeta Jelly NFT survive? These are questions only time can answer. But if you’d like to know more about surviving a bear market, Nacho has written an excellent article on “How to Avoid Getting Rekked During The Bear Market”.