As Ethereum’s transition to proof-of-stake (PoS) gets closer and the network’s hashrate taps another all-time high, the Ethereum 2.0 contract is close to nearing 13 million ether worth $22.6 billion using today’s ether exchange rates. Moreover, according to a decentralized finance (defi) educator, the $22.6 billion worth of ethereum that continues to grow won’t be unlocked until another upgrade is enforced following The Merge.
Ethereum 2.0 Contract Nears 13 Million Ether Locked – Defi Educator Says Merger Won’t Be a Negative Price Catalyst
On June 4, 2022, the etherscan.io webpage that hosts the Ethereum 2.0 contract, indicates that there are 12,785,941 ether locked in the contract. The Ethereum 2.0 contract holds the funds for a large number of ETH validators as it takes 32 ETH to become a validator. Every day a decent amount of validators lock funds into the contract and the current value locked into the contract is worth $22.6 billion using current Ether exchange rates. In the past 24 hours, more than two dozen deposits of 32 ether ($56,684) have been added to the contract.
The $22.6 billion in ETH is locked and not liquid and may not be for quite some time. This means once the 32 ETH is deposited, the funds will remain locked up until plans are coordinated after the PoS transition. Just recently, the decentralized finance (defi) educator Korpi published a thread about the assumption that the 12.7 million ether will immediately be unlocked and dumped after The Merge.
“I have noticed that some people view The Merge as a negative price catalyst due to a supposed huge [ethereum] unlock – This is wrong,” Korpi shared on Twitter. “Staked [ethereum] will not be unlocked at The Merge. The merger will not allow withdrawals. This is scheduled for another Ethereum upgrade that could take place 6-12 months after The Merge. In other words, the two staked [ethereum] and staking rewards won’t go into circulation for a long time,” Korpi added. The Challenge Educator continued:
Unlocked [ethereum] will be released slowly. Even when withdrawals are enabled, all staked [ethereum] won’t be immediately available. There will be an exit queue which may take more than a year in the worst-case scenario or several months in a more realistic one. [The] release will be slow.
Korpi is of the opinion that “Ethereum Maxis” staking coins will not sell so easily
Most recently, on June 4, at a block height of 14,902,285, Ethereum’s hashrate hit an all-time high of 132 petahash per second (PH/s). 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 take place in August. Ethereum co-founder Vitalik Buterin confirmed that The Merge could be implemented by August, but he also escaped delays.
Amid the recent network records, Ethereum’s Beacon chain experienced a seven-block reorganization, and these types of issues may invoke a PoS transition delay. Ethereum’s Beacon chain is the chain that runs parallel alongside the proof-of-work (PoW) Ethereum network. Ethereum developer Tim Beiko recently detailed that The Merge will likely go live by the third quarter of 2022. Beiko further stressed that he “strongly suggests” ethereum (ETH) miners do not invest in more mining rigs going forward.
Challenge educator Korpi continued his Twitter thread by explaining that the Ethereum 2.0 withdrawal process will be slow. “Retract [ethereum], a validator must exit the set of active validators, but there is a limit to the number of validators that can exit per epoch. There are currently 395,000 validators (active + pending). If no new ones are put up (very unlikely), it will take 424 days for them all to come out. staked [ethereum] is often a battery never sold. Korpi added:
Who would voluntarily lock [ethereum] for many months, not knowing when withdrawals will be even possible? [Ethereum] maxis, no doubt. Most [ethereum] stakers are long-term investors. They are not interested in selling, especially not at current prices.
