The selling pressure on Ethereum has declined, according to crypto analytics firm, Glassnode. This trend is attributable to the much-anticipated rollout of the Ethereum 2.0 that supports the Proof-of-Stake consensus. As the Ethereum community prepares for ETH 2.0 launch scheduled for Q2, 2022, deposits on smart contracts for staking have increased. Available data puts the number of Ethereum staked as of last week, at 6 million.
The declining pressure is expected as investors withdraw their ETH on crypto exchanges to stake on smart contract-enabled pools. Usually, when investors, especially whales, transfer their assets to exchanges, it is most likely that they plan to sell off.
Inflow of ETH into Smart Contracts Now at 26%
Glassnode’s data further show ETH investors are massively withdrawing their holdings from crypto exchanges. This has gone for 12 months on end, starting from Q2 of 2020 when the price of ETH was trading between $200 and $300. The decline in crypto exchanges’ ETH inflow is said to be antithetical to the figures recorded between 2018 and 2020. Meanwhile, current inflow of ETH into smart contracts is pegged at above 26%, well beyond past figures observed within a six-year timeframe.
While the date for the deployment of Proof-of-Stake-based ETH 2.0 draws near, the proposed London Hardfork that began earlier in July is almost complete. The touted improvement proposal, EIP-1559 has been deployed across all testnets for the upgrade. EIP-1559 is aimed at introducing a model-fee mechanism called ‘base fee’ on the network in view of the high fees challenge. The spike in DeFi activities in 2021 contributed to congestion on the network, as community members complained about paying exorbitant fees for small to medium transactions.
EIPs 1559 and 3354 Lead Other Improvement Proposals
EIP-1559 is not the only upgrade proposal for the London Hard fork, however, due to the challenges it touches upon and is aimed at addressing, it has become the most talked about proposal. Another proposal worthy of mention is the EIP-3554 which is a build-up to ETH 2.0.
This EIP will make mining on the current network difficult via a mechanism called ‘difficulty time-bomb’ and force miners to migrate to the v2. Vitalik Buterin, Ethereum’s founder said the 1559 scaling solution would make ETH an ‘ultrasound’ money as it also includes a deflationary plan for Ethereum.
As of last week, Ethereum had led an altcoins’ revolt against Bitcoin dominance which saw a host of DeFi tokens surpass their previous ATHs. Axie Infinity’s $AXS reached an ATH of $18. $SNX and Uniswap’s $UNI were not left out as well.
In light of the upgrades and projects the network is undergoing, experts have posited that Ethereum may likely overtake Bitcoin in a race to dominance, and in what they referred to as ‘Ethereum Flippening.’ For now, the focus of institutional investors and investment funds is on Bitcoin. If their focus shifts from the flagship cryptocurrency, Ethereum may be their next port of call.
Tokenhell produces content exposure for over 5,000 crypto companies and you can be one of them too! Contact at info@tokenhell.com if you have any questions. Cryptocurrencies are highly volatile, conduct your own research before making any investment decisions. Some of the posts on this website are guest posts or paid posts that are not written by Tokenhell authors (namely Crypto Cable , Sponsored Articles and Press Release content) and the views expressed in these types of posts do not reflect the views of this website. Tokenhell is not responsible for the content, accuracy, quality, advertising, products or any other content or banners (ad space) posted on the site. Read full terms and conditions / disclaimer.
