Ethereum Upgrade to Unlock Over $30 Billion in Crypto Tokens

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

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

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

The upgrade is slated for around 2230 GMT, according to a tweet by Tim Beiko of the Ethereum Foundation, a body that speaks for the Ethereum network.

The changes will likely lead to increased volatility for ether, investors have predicted.

Some believe that massive redemptions could lead to a wave of selling, which in turn would weigh on the price of ether, whose market cap of around $230 billion is topped only by bitcoin.

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

In its latest significant upgrade, Ethereum in September drastically reduced its energy use — a move proponents said would give Ethereum an advantage as it seeks to surpass bitcoin.

But ether has continued to lag its larger rival, gaining just under 60% this year against a more than 80% jump for bitcoin.

After trillions of dollars were wiped from the crypto market in a bruising 2022, the sector has rallied in 2023 on expectations that central bank rate hikes will slow.

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

However, it is still little used in ordinary commerce or finance.

Reporting by Tom Wilson in London; editing by Jason Neely

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