It’s been a month since the big Shapella upgrade. Here’s how Ethereum has changed since then

Published Tue, May 16 20232:09 PM EDT

A little over a month ago, Ethereum underwent a major technology upgrade that allowed investors to withdraw their "staked," or locked up, coins on the network for the first time ever. The change, known as Shanghai or Shapella, was meant to bring more liquidity to the network by allowing investors to withdraw their staked assets. There were initial concerns about potential sell pressure that might hit the market as a result. However, more liquidity also means developers can create better and more differentiated applications on the network. Ether 's price has fallen about 14% over the past month, though it's still up more than 50% year to date, according to Coin Metrics. Many of the down moves have been more closely tied to investor concerns about the economy and the likelihood of a recession, as well as the health of the U.S. banking sector. Staking trends have beaten expectations, however. As of Tuesday, the total amount of ether staked is about 18.2 million, and there are about 573,000 validators on the network, who are earning an average return of 5.5%, according to Beaconcha.in, an Ethereum blockchain data tracker. Fees on Ethereum are the highest they've been in a year, according to CryptoQuant, which leads to higher yields for investors who stake their ether. The total value of ether staked has risen, while the supply has fallen dramatically. "In the month since [Shapella], Ethereum has seen record staking inflows, so more and more investors are recognizing ETH, especially staking ETH, as a competitor to U.S. T-bills with an equivalent 5% yield and now a duration below 30 days," said Matthew Sigel, head of digital assets research at VanEck. "After the initial backlog of withdrawals … the backlog to withdraw ETH is now down to zero days and there's a 30-day backlog to enter the staking queue. So compared to what expectations were a month ago, we've flipped completely," he added. The backlog of withdrawals in April was dominated by the crypto exchange Kraken, which was forced to get out of the staking business by the Securities and Exchange Commission in February. There's a limited number of investors who can withdraw their coins at any given time due to the two-day "unbonding" period — the amount of time a blockchain delegator waits before they can move or sell their tokens — and a variable exit queue that changes based on the number of participants in line. Some expected that post-Shapella, investors would wait as long as 30 days to 60 days to exit. Here's what else has happened in the month since Shapella: 1. Staked ETH is at record highs The total volume of staked ether has hit a record high of 21 million ETH, and the daily volume of ether being staked is at its highest since November 2020, according to CryptoQuant. Many worried that with the new ability to withdraw their locked up funds, investors would take the opportunity immediately and dump millions of ether onto the market, Owen Lau, an analyst at Oppenheimer said. "It looks like the initial selling pressure is done, and people feel more comfortable about the staking now," he said. "And that's how you attract more investors to come back in." 2. Higher fees As network activity spiked, fees surged to their highest level in a year, according to CryptoQuant. Some skeptics believed ether yields could decline with a rise in staking, Bernstein analyst Gautam Chhugani pointed out in a note Monday. So far, however, ETH fees have outpaced the growth in the amount of ether staked, leading to higher yields, he said. 3. More depositors on the network The number of new stakers has accelerated since Shapella. The number of unique depositors has grown about 8% since April 12, with people being more willing to lock up their funds for a return now that they're also able to withdraw them, according to CryptoQuant's Julio Moreno.