According to Bloomberg, speculators are increasingly betting on tokens linked to the next Ethereum network upgrade, known as Shanghai.
The much-anticipated upgrade is scheduled for March. It will enable Ether holders to withdraw their staked coins.
Coin prices have risen across the board in recent weeks, just months after the infamous FTX implosion, which forced experts to reconsider their most pessimistic predictions for the nascent crypto industry.
Cryptocurrencies to so-called liquid staking apps, which provide Ether holders with a way to earn yield without having to sell their tokens, are among the biggest winners. These include the Lido and Rocket Pool coins to take off.
The most recent is similar to the one that occurred in September ahead of the much-anticipated software upgrade known as the Merge, which enabled the second-largest blockchain to switch to a new consensus algorithm known as proof-of-stake.
According to Henry Elder, Wave Financial’s head of decentralized finance, people are expecting an increase in adoption following Shanghai.
Since early November, when the entire cryptocurrency market experienced a massive crash due to the collapse of the FTX exchange, the LDO token, which serves as the Lido app’s governance token, has seen a triple-digit increase. Lido is now the most popular decentralized finance application, with over $8 billion invested in the protocol.
When withdrawals are enabled, roughly one-fifth of all Ether tokens in circulation will be staked by the end of 2023.
Withdrawing staked Ether from the Ethereum network may still take some time after Shanghai. While the tokens’ liquidity is likely to improve, there is a risk that they will become stuck.
There is also a risk that speculators who drove up the prices of governance tokens for liquid-staking apps will sell just as Shanghai goes into effect.
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