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Analyzing Ethereum Post-Shapella Upgrade: Nansen

Why Didn’t ETH Dump After Shanghai? Interview With Nansen

In anticipation of the recent Shapella upgrades, many experts in the cryptocurrency industry speculated that the activation of staked Ether withdrawals would cause the price of the native asset to decrease.

However, new data suggest that the pressure to sell ETH post-withdrawal “has been somewhat of a non-event.” This is bolstered by the fact that deposits have almost matched the amount of ETH coming into circulation.

State of Ethereum: Post Shapella

The Shapella implementation was crucial as it allowed for the withdrawals of staked ETH from the Beacon Chain for the first time. However, there were also concerns that unstaked ETH entering circulation could result in sustained selling pressure. On the other hand, the bullish outlook argued that the elimination of withdrawal risk would result in more deposits.

According to a recent report by Nansen that analyzed the state of Ethereum post-Shapella, the elimination of unstaking risks has thus far offset the selling pressure from withdrawals. Moreover, a significant portion of the ETH withdrawn is likely not intended for selling.

The report states that the upgrade had a net zero impact on ETH staked.

“There are 19.3M ETH, including rewards, on the Beacon Chain today, equivalent to the amount of ETH on the Beacon Chain during the time of the Shapella upgrade, meaning that it has had a net zero impact on the network so far.”

Withdrawal requests were dominated by centralized crypto exchanges. Kraken, for example, accounted for over 26% of all ETH withdrawals since the upgrade. This is likely due to the recent regulatory crackdown on the US-based exchange’s staking service, which has forced it to return the staked ETH to depositors of its platform.

“Other notable Principal ETH withdrawers include Binance, Coinbase, and Private Transactions Miner: 0xffd, with 13.3%, 12.5%, and 5.44% of the share of Principal ETH withdrawn, respectively.” – the report reads.

Withdrawn ETH Since Shapella. Source: Nansen

A month after the upgrade, withdrawals have significantly slowed down, and Nansen’s data suggest that most entities are currently holding onto their remaining balance for now. Entities such as Lido, Binance, Coinbase, Kiln, and Stakefish account for deposits of more than a million Ether over the past month.

Withdrawers Behaviour

Nansen reported that nearly 73% of the withdrawn ETH from the Beacon Chain thus far has been sent to centralized exchanges. However, most of this is CEXs withdrawing ETH to themselves, which suggests that the majority of the tokens sent to these entities are not intended for selling. Instead, these tokens are for the exchanges’ internal operations.

In contrast, the amount of ETH sent to decentralized exchanges by withdrawers only represents 1.23% of the total proportion. Nansen found that around 20% of the withdrawn ETH had been sent to all miscellaneous addresses that are not labeled as CEX, DEX, Staking, or DeFi. Additionally, approximately 6% of all withdrawn ETH was sent to re-stake.

Nansen believes this cohort is less likely to take profits as they are still running validator nodes, and staking rewards are processed automatically. Therefore, some ETH from partial withdrawers would return to the Beacon Chain to rake in more yield.