Ethereum Upgrade to Unlock Over $30 Billion in Crypto Tokens

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April 12 (Reuters) – The software that underpins the second-largest cryptocurrency ether is due for a software upgrade on Wednesday that will give investors access to more than $30 billion worth of tokens digital.

Known as Shapella, the latest upgrade to the Ethereum blockchain will allow investors to redeem an offshoot of ether tokens they have deposited in exchange for interest on the blockchain network over the past three years.

According to data firm Dune Analytics, these so-called “staked ether” tokens currently make up around 15% of all ether tokens and are worth some $31 billion.

The upgrade is scheduled for around 22:30 GMT, according to a tweet from Tim Beiko of the Ethereum Foundation, an organization that speaks on behalf of the Ethereum network.

The changes will likely lead to increased volatility in Ether, investors predicted.

Some believe that widespread buybacks could lead to a wave of selling, in turn weighing on the price of ether, whose market value of around $230 billion is surpassed only by bitcoin.

“The release of this previously unrealized investment could result in significant downward price pressure if immediately liquidated,” Deutsche Bank analysts said in a note.

In its last major update, Ethereum in September drastically reduced its power consumption – a move supporters say would give Ethereum an edge as it seeks to outperform bitcoin.

But ether continued to lag its biggest rival, gaining just under 60% this year compared to a jump of over 80% for bitcoin.

After billions of dollars were wiped from the crypto market in a killer 2022, the sector rallied in 2023 on expectations of slowing central bank interest rate hikes.

Ethereum has become popular in so-called decentralized financial applications, which offer financial services while avoiding traditional industry gatekeepers such as banks.

However, it remains little used in consumer commerce or finance.

Reporting by Tom Wilson in London; edited by Jason Neely

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The opinions expressed are those of the author. They do not reflect the views of Reuters News, which is committed to integrity, independence and non-partisanship by principles of trust.

Thomas Wilson

Thomson Reuters

Tom covers crypto companies, regulation and the London markets, focusing through 2022 on crypto exchange Binance. He has worked at Reuters since 2014, with a previous assignment in Tokyo where he uncovered abuses in Japan’s immigration system and won a joint Overseas Press Club award for his reporting on tobacco giant Philip Morris.

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