The Ethereum Shanghai Capella upgrade marked the completion of the network's transition from Proof-of-Work (PoW) to Proof-of-Stake (PoS). Since the launch of the Beacon Chain in September 2022, Ether (ETH) staking services have been made available on the Ethereum network through three options namely solo staking, Staking-as-a-Service (SaaS) and pooled staking each with respective risks, rewards and requirements. The implementation of the Shanghai Capella upgrade on 12 April 2022 closed the loop on the liquidity flow of the staking mechanism on Ethereum network by enabling the partial and full withdrawals of staked ETH and ETH staking rewards.
With this, let's explore some of Ethereum network’s key metrics post-Shanghai Capella.
1/ Market Capitalization of ETH
The market capitalization of ETH recorded a sharp increase on 12 April 2023 hitting an intra-year peak of about USD260 billion on 16 April 2023 though the building up of selling pressure resulted in the market correcting itself on 18 April 2023 after which the market capitalization of ETH reverted to its pre-Shanghai Capella levels.
2/ Average Transaction Fee on the Ethereum Network
The average transaction fee on the Ethereum network recorded two notable upticks i.e. from 12 - 24 April 2023 (peaking at USD12.01 per transaction) and from 1 - 4 May 2023 (peaking at USD12.94 per transaction) as existing ETH depositors started withdrawing their staked ETH and ETH staking rewards whilst new ETH depositors initiated the staking of their ETH.
3/ Withdrawals and Deposits on the Ethereum Beacon Chain
There was a notable increase in the amount of ETH deposits post-Shanghai Capella as new ETH stakers look to get the clock to start ticking for their ETH staking rewards counter. ETH withdrawals from the Ethereum Beacon Chain hit its peak on 15 April 2023, resulting in a net outflow of staked ETH amounting to about USD352K from the Chain.
4/ Cumulative ETH Deposits and Number of Validators on the Ethereum Beacon Chain
There was a slight drop in the cumulative ETH deposits on the Beacon Chain post-Shanghai Capella whilst there was a quite a significant dip in the number of validators on the Chain (from about 567k on 12 April 2023 to about 468k on 16 April 2023) as the number of nodes which are holding the requisite 32 ETH to be a validating node on the Ethereum network decreased considerably as existing ETH stakers started withdrawing their staked ETH and ETH staking rewards.
5/ Breakdown of ETH Depositors
About 27% of ETH depositors are users of Lido followed by Coinbase (12.1%), Kraken (6.4%) and Binance (5.2%). About 6.7% of ETH depositors are whales i.e. market movers who are holding sufficiently large amounts of ETH to influence the market trading price of the token.
Key Takeaways
- The Shanghai Capella upgrade prompted the price of ETH to be over the Moon for about a week after the implementation of the upgrade.
- The post-Shanghai Capella upgrade withdrawals of staked ETH and ETH staking rewards coupled with a sustained spike in ETH deposits resulted in two major upticks in the average transaction fee on the Ethereum network over the period of three weeks after the implementation of the upgrade.
- Whilst the withdrawals of staked ETH and ETH staking rewards are showing signs of fizzling out, the trend of increased ETH deposits continues to gain momentum with Lido being the preferred ETH staking platform.
- Whilst the effects of the withdrawals of staked ETH and ETH staking rewards on the volume of cumulative deposited ETH on the Beacon Chain is negligible, these withdrawals have had a marked effect on the number of validators on the Chain.
A report by the Crypto Carbon Ratings Institute (CCRI) found that post-The Merge, the annualised electricity consumption of the Ethereum network has reduced by more than 99.988% whereas its carbon footprint has decreased by approximately 99.992% (from 11,016,000 to 870 tonnes CO2e). With the Ethereum network having completed its transition to PoS through the Shanghai Capella upgrade, the network is now a fully green blockchain network.
