• Ethereum’s Shanghai upgrade has led to a record 572k ETH staked in a week, driven by institutional investment and reinvested rewards.
• Investors have increased their Ethereum staking activities following a decline in correction between ETH and Bitcoin after the Shapella upgrade.
• According to aggregate market data, more than 1.6 million ETH worth approximately $3 billion has been withdrawn since the upgrade.
Ethereum’s Shanghai Upgrade
The Ethereum network recently underwent an upgrade called ‘Shanghai Shapella’ which has resulted in a record 572k ETH being staked in just one week. The surge was mainly due to institutional investors taking advantage of the secure profits offered by the proof-of-stake (PoS) consensus mechanism and reinvesting rewards from successful validations.
Record Staking Activity
According to aggregate market data provided by dune analytics, about 571,950 ETH was deposited into staking contracts, bringing the total amount of staked ether up to 18,534,825 units. Over 1.6 million ETH worth approximately $3 billion was also withdrawn since the upgrade took place on April 12th 2021.
Strong Institutional Investment
Institutional investors have taken advantage of the reward offered by Ethereum’s PoS system – around 5% APR – and invested heavily in it, despite daily withdrawals of 50k Ethers still occurring. A recent research conducted by Coinbase Global revealed that an additional 73,000 ether could be unlocked through partial withdrawals and 822,000 through full withdrawals over roughly 15 days as of April 20th 2021.
Falling Correlation between BTC & ETH
The falling correlation between Bitcoin (BTC) & Ethereum (ETH) is attractive for quantitative strategies that rely on cross-hedging one asset for another or using Eth as a hedge for less liquid altcoins according Dune Analytics researchers David Duong & Brian Cubellis who wrote: “From a fundamental perspective it supports diversification arguments in favour of holding both BTC and ETH“.
Conclusion
Overall it seems that institutional investors are increasingly comfortable with investing into Ethereum’s PoS system thanks to its secure profits available while also providing them with diversity options when hedging other assets like BTC or altcoins against it.