As Ethereum’s transition to Proof-of-Stake (PoS) draws closer and the network’s hashrate hits another all-time high, the Ethereum 2.0 contract is approaching nearly 13 million ether worth $22.6 billion if one based on today’s ether exchange rates. Additionally, according to a decentralized finance (defi) educator, the $22.6 billion worth of Ethereum, which continues to grow, will not unlock until another upgrade is forced after The Merge.
Ethereum 2.0 Contract Approaching 13M Ether Locked – Defi Educator Says Merger Won’t Be Negative Price Catalyst
On June 4, 2022, the etherscan.io website hosting the Ethereum 2.0 contract states that 12,785,941 ethers are locked into the contract. The Ethereum 2.0 contract contains the funds for a large number of ETH validators, as 32 ETH is required to become a validator. Every day, a decent number of validators lock funds in the contract, and the current value specified in the contract is $22.6 billion at today’s Ether exchange rates. Well over two dozen deposits of 32 Ether ($56,684) were added to the contract in the last 24 hours.
The $22.6 billion in ETH is locked and illiquid and may not be for some time. This means once the 32 ETH is deposited, the funds will remain locked until post-PoS transition plans are coordinated. Only recently the decentralized financial (defi) teacher body posted a thread about the assumption that the 12.7 million Ethers will be unlocked and dumped immediately after The Merge.
“I’ve noticed that some people see The Merge as a negative price catalyst due to a perceived giant [ethereum] unlock — This is wrong,” Korpi explained on Twitter. “Staked out [ethereum] will not be unlocked in The Merge. The merge does not allow withdrawals. This is planned for another Ethereum upgrade that may happen 6-12 months after The Merge. In other words, both plugged in [ethereum] and staking rewards are a long way from circulating,” added Korpi. The defi educator continued:
Unlocked [ethereum] is slowly being released. Even if withdrawals are enabled, all are wagered [ethereum] will not be available immediately. There will be an exit queue that could last more than a year in the worst case, or several months in a more realistic case. [The] release will be slow.
Korpi thinks that Ethereum Maxis coins are not that easy to sell
Most recently, on June 4th, Ethereum’s hash rate hit an all-time high of 132 petahash per second (PH/s) at a block height of 14,902,285. In late May, ETH transaction fees hit a 10-month low as transaction costs fell below $3. At the recent Permissionless conference, Ethereum software developer Preston Van Loon said The merger could happen in August. Ethereum co-founder Vitalik Buterin confirmed that The Merge could be implemented by August, but also avoided delays.
Amid the recent network records, Ethereum’s beacon chain has been reorganized by seven blocks, and these types of issues can cause the PoS transition to be delayed. Ethereum’s beacon chain is the chain that runs parallel to the Proof-of-Work (PoW) Ethereum network. Ethereum developer Tim Beiko recently stated that The Merge will likely go live by Q3 2022. Beiko further emphasized that he “strongly suggests” that Ethereum (ETH) miners stop investing in more mining rigs in the future.
Defi educator Korpi continued his Twitter thread by stating that the Ethereum 2.0 withdrawal process will be slow. “To retire [ethereum], a validator must exit the active validator set, but there is a limit to how many validators can exit per epoch. There are currently 395,000 validators (active + pending). If no new ones are set up (highly unlikely), it will take 424 days to finish them all. staked out [ethereum] is often a stack that never sells.” Korpi added:
Who would voluntarily block [ethereum] not knowing for many months when withdrawals will even be possible? [Ethereum] Maxis, no doubt. Most [ethereum] Stakers are long-term investors. They have no interest in selling, especially not at current prices.
What do you think about the Ethereum 2.0 contract that closes 13 million ether? What do you think of Korpi’s statements and the slow settlement process he explained? Let us know what you think about this topic in the comment section below.
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