Market Bets Against Ethereum PoS Upgrade
One of the biggest announcements in Blockchain history was the Ethereum EIP-1559 which is seeing Ethereum transition from a Proof-of-Work (PoW) blockchain to a Proof-of-Stake (PoS) network. but this announcement caused quite the outrage amongst Ethereum miners whom ever since Ethereum grew in popularity saw extremely high profits from confirming blocks and approving transactions.
Naturally they tried to protest and cause a revolt against Vitalik but in the end it was clear that Ethereum would be going a head with EIP-1559.
London Hardfork
Despite many delays the London Hardfork was implemented to support the transition to PoS and attempt to lower mining fees by setting a base rate of fees. Unfortunately this hasn't brought down the price of Ethereum all that much but did result in an investment boom as Ethereum began to depreciate.
Through the Ethereum Improvement Protocol that was enacted a portion of fees instead of being delivered to miners was burned. To also support miners the difficulty which was set to occur was delayed until 2022.
Another advancement was the establishment of BETH but the only way to get BETH was to lock Ethereum into the network in a form of stake to run a validator. This saw the price of Ethereum increase but the catch was that you could not unstake any of it. It was also a costly investment as it required a minimum of 30 Eth tokens, not a small amount.
It didn't take long for community projects to launch that enabled people with less than the required amount of Ethereum to be able to pool their Ethereum with others and participate in staking and earning rewards.
Lido has been the most popular choice which holds one of the most amount of staked Ethereum by wrapping it and providing participants with stETH in return. With all things crypto it again didn't take long for people to develop contracts that enabled people to trade stETH or use it as collateral to borrow against.
But this is where it begins to get tricky.
Market Votes Against BETH
Since the collapse of Luna stETH has began to become depegged which indicates a lack of liquidity as participants begin to sell of assets with long term staking requirements.
With a large portion of the market collapsing due to UST a lot of liquidity has now dried up and there aren't too many more new investors joining the que.
This means the market is losing confidence in not just any staking tokens but Ethereum itself which probably has a lot to do with further delays in transitioning to PoS Network. A Goldman Sachs investigation pointed to the fact that participants bridged Ethereum to Terra and utilised the token as collateral on Anchor Protocol.
Now as the entire blockchain community is still reeling from devastation caused by the Luna Collapse many more are steering clear of staking tokens for long lock periods.
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