The upcoming Shanghai upgrade of Ethereum is expected to unlock a significant amount of staked Ether, which could benefit liquid staking platforms and enhance the network’s liquidity and competitiveness. Scheduled for March, the hard fork will implement five Ethereum Improvement Proposals, including EIP-4895, which allows users to withdraw their locked-up tokens representing staked Ether from the Beacon Chain.
This feature is expected to increase market liquidity and make it easier for users to access their funds, while also increasing Ethereum’s staking ratio closer to its competitors. Liquid staking platforms, which have largely emerged to alleviate the blockchain’s prohibitive lock-up and staking requirements, are anticipated to benefit from the upgrade. Lido is the largest liquid-staked ETH provider, with other notable providers including Rocket Pool, Ankr, Coinbase, and Frax Finance. According to The DeFi Investor, once staked ETH becomes available for withdrawal, the revenue of liquid staking providers is likely to increase significantly, positively impacting their token prices.
The increased competition between these platforms is also expected to benefit their users through lower fees and additional perks. Ethereum maintains the lead in liquid staking activity, with over 7 million ETH liquid-staked across all sources, while competing networks have budding liquid-staking solutions of their own. Liquid staking and staking pools provide Ethereum an edge over competitors by improving interoperability for decentralized applications in the ecosystem, strengthening the security and utility of all protocols using Ethereum’s PoS consensus mechanism.
