Ethereum deposits fall due to regulatory pressure and Shapella upgrade
Ethereum deposits have fallen slightly in recent weeks due to increased regulatory pressure and the Shapella upgrade scheduled for April 12.
On April 9, on-chain analytics provider Glassnode reported on the current state of the Ethereum ecosystem.
The data revealed that deposit activities are currently low “due to regulatory pressure and the Shanghai upgrade.”
Financial regulators in the US have come down hard on crypto this year. The Securities and Exchange Commission (SEC) is adamant that Ether (ETH) is a security and has clamped down on its efforts despite the fact that there is no official legislation from Congress classifying ETH as such.
The Ethereum network will undergo a long-awaited upgrade on April 12. The Shapella hard fork, also known as the Shanghai hard fork, will enable the gradual release of ETH staked on the Beacon Chain.
These two factors have caused the decline in Ethereum deposits, according to Glassnode.
The firm also noted that large centralized exchanges such as Coinbase, Binance and Kraken have lost a lot of market share to the liquid stake platform Lido.
“When the dust settled between the three giants, it was Lido who emerged victorious, continuing to dominate the deposit today,” it noted.
Lido currently accounts for almost a third of the total stake in ETH. This equates to around $11 billion from 5.9 million ETH on the platform.
Centralized exchanges like Coinbase take a hefty 25% commission from the stake rewards, with Coinbase’s commissions being even higher for other assets like Cardano (ADA) and Solana (SOL).
Lido takes a 10% commission and offers the potential to earn additional returns on DeFi platforms through its Lido Staked ETH (stETH) staking token. This explains the shift over time as savvy players switched to more profitable platforms.
Analysts have predicted that floating stake platforms like Lido will get a boost when ETH is released from the Beacon Chain after the Shapella upgrade.
Related: Analysts discuss the ETH price results of Ethereum’s upcoming Shapella upgrade
According to Ethereum metrics tracking platform Ultrasound.Money, there are currently 18.1 million ETH staked in total, currently valued at around $33.7 billion and representing 15% of the entire supply.
After the Shapella upgrade, it will slowly be released for withdrawal in the weeks and months to follow.
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