Ethereum’s recent implementation of the Shapella update on April 12 was pivotal as it brought about changes for validators, allowing them to withdraw their staked ETH from the network.
At first, the development led to a backlog of withdrawal requests as investors looked to cash in on their staked assets. This led to concerns that massive withdrawals would lead to a crash in the price of ETH. However the past week has provided cause for positivity as staked assets have begun to return to pre-Shapella levels.
Validators’ Confidence Restored In Recent Days
This trend began on April 17, when there were more deposits than withdrawals for the first time since the Shapella update. At the end of the day, there was about 68,000 ETH staked on the Ethereum network.
This continued on Tuesday, April 18th, when there was a positive balance of 26,680 ETH – with 91,500 ETH deposited versus 64,830 ETH withdrawn. Unsurprisingly this trend has continued throughout the week, with staked ETH more than the amount withdrawn, according to on-chain data.
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This trend suggests increasing confidence among validators in the staking process post-Shapella update. It also supports the belief that enabling withdrawals has not resulted in the mass exodus of validators.
Nevertheless, the balance is still negative when considering the data for the past week. Overall about 1.4 million ETH has left the network as against 700,000 that has been deposited. In addition, there is over 650,000 ETH that has not been withdrawn.
As seen in the chart above, not all validators withdrew their stake of 32 ETH. Some validators have partially removed the interest generated from their original deposit.
Ethereum Witnesses Increase In Token Burns
The launch of the Shapella update has also resulted in a significant increase in ETH burns. This is one of the consequences of the update, and in the past week, there has been a steady increase in daily burns.
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In the past three days, a total of 17,000 ETH has been burnt from circulation, causing debate within the Ethereum community. This latest surge in burn rates could be linked to the recent spurs in Pepe (PEPE) and Chad (CHAD) meme tokens that have taken the crypto community by storm.
There has been a rise in the use of MEV (maximum extractable value) robots to earn rewards in the meme tokens by rearranging transactions in blocks on the Ethereum network.
The burning mechanism was implemented in August 2021 on the Ethereum network as part of EIP-1550 proposals. This development was made to transition ETH into a deflationary asset in the future, decreasing its supply and increasing its value.
At the time of writing, Ethereum is valued at $1,850, down 11% in the past week as the crypto market has turned red. It remains to be seen if this is a slight market correction or the end of the bullrun.
Featured image from Istock.com Charts from Tokenunlocks, Dune Analytics and TradingView