Shappella is happening in a few hours. How major will this catalyst impact the industry? What challenges or opportunities will it present? Ilya Volkov, CEO of and Co-Founder of YouHodler, a Swiss-based international fintech platform providing a variety of Web3 crypto and fiat services, shares his insight on what to expect come.
How will this upgrade impact the blockchain industry? Will Ethereum start a trend of transforming from PoW to Pos?
The Ethereum Shanghai upgrade has the potential to massively affect the blockchain industry, especially liquid staking providers on the Ethereum blockchain. Once the upgrade is complete, I predict many investors will turn to liquid staking as it allows them to use liquid staking derivatives on other DeFi networks without having to give up their staking yields.
Seeing as this will bring more users to liquid staking providers, their tokens will likely increase in price as well. I think that could inspire other blockchains to move from PoW to PoS as the revenue becomes too large to ignore.
What are your thoughts on whether PoS tokens are considered securities?
I actually don’t think it’s as negative as other people are suggesting. If the U.S. SEC decides that PoS tokens are considered securities, this will bring some much-needed regulation and clarity to the industry. Furthermore, it will actually help the decentralization movement.
Centralized exchanges are no longer able to offer staking services in the U.S. So, ETH will be withdrawn from these exchanges and staked elsewhere (e.g decentralized staking services). At the moment, the SEC cannot prevent users from staking ETH tokens via an individual note or via decentralized staking services. So this actually forces the government to play by the rules of decentralization while simultaneously creating a regulatory framework we all need.
What exactly is going to happen in the Ethereum Shanghai upgrade?
Many say that the Ethereum Shanghai upgrade represents the final step in Ethereum’s migration to proof-of-stake. Many elements are making up this upgrade but the one everyone is most excited about is the ability for stakers to withdraw their staked coins and earned rewards
Before funds were locked up in the network but now this won’t be the case. I imagine this upgrade will inspire more validators to join Ethereum. This increase in use-case is a bullish signal for the ETH token and perhaps the market in general.
What are the important risk factors following Ethereum Shanghai?
With any major event in this industry, investors and traders alike should take precautions due to expected volatility. Volatility in either direction is considered risky because it brings unpredictability and uncertainty into the markets. In addition, this results in large financial losses and potentially larger economic issues. Hence, investors and traders should not quickly buy into market emotions following the Shanghai upgrade, regardless of the outcome. Consider your risk tolerance and be sure you have a healthy, diversified portoflio.
What’s your prediction of the price of ETH, after the Shanghai upgrade?
A plunge is likely to happen shortly after the completion of the upgrade, as a huge amount of ETH will be unlocked, and many people will also be selling their ETH.
In the long term, as such an upgrade will positively impact the market and even the entire blockchain atmosphere, I believe ETH will rise again. In addition, Vitalik and his team must have learned from previous upgrades and will maintain the ecosystem with multiple tools – controlling staking rates, and managing lock-ups, to name a few.
What are some related price catalysts that need attention?
The usual price catalysts are always in play and should be monitored at all times. This includes economic indicators (GDP, inflation rates, employment data, etc), industry news, geopolitical events and more. While it may seem like there are more price catalysts today than ever, investors should realize there are many factors that affect asset prices at all times throughout history. It is the nature of the market.
Investors always need to carefully asses their investment goals and risk tolerance before making financial decisions.
How will this upgrade impact the overall crypto market, and what does it mean for investors?
Overall, I think it will have a positive impact on the crypto market. Firstly, it will further incentivize ETH liquidity by increasing innovation, strengthening ETH’s position as a leading staking protocol, and giving stakers more confidence as now they can withdraw funds.
Any lessons we can learn from previous upgrades, like last year’s Ether Merge?
The Merge was a classic case study in risk. We learned a few important lessons from that event such as:
Risk is necessary and beneficial
Change takes time and can’t be rushed
Changes produce positives and negatives
Transparency was a key part of the Merge’s success
Any company undergoing a big change should heed that advice.
Any additional thoughts you’d like to share, in relation to Ethereum Shanghai?
The crypto world needs to borrow wisdom from traditional instruments and monetary policies to maintain sustainable growth and promote innovation across financial markets. For example, we’ve seen many cases where central banks managed to activate domestic economies by changing interest rates, similar to changing crypto staking rates.