Will the staked ETH be sold after the Ethereum Merge ends?

This article is a compilation of DeFi Degen Korpi’s views on his personal social media platform:

Some people believe that ETH will crash after the Merge is completed, because 12 million ETH will be unlocked and sold after the Merge is completed. But I think this view is wrong for three reasons:

1. Staked ETH will not be unlocked during the merge process

2. The unlocked ETH will be released slowly

3. ETH used for pledge is considered as real estate

1. Staked ETH will not be unlocked during the merge process

During the merger, ETH cannot be withdrawn. There will be another upgrade within 6-12 months after the merger is completed. In other words, the staked ETH and the income will not enter the market for a long time.

2. Unlocked ETH will be released slowly

Even if holders can freely withdraw ETH, all ETH cannot be withdrawn immediately. The release process is slow, and it usually takes several months to complete the unlocking, or even more than a year.

To withdraw the staked ETH, validators need to exit, but the number of exits available for each node is limited. There are currently 395,000 validators, and as long as the system is not updated, it will take 424 days for them to all exit.

3. ETH used for pledge is considered real estate

Now it is unknown when ETH staking will be available, so who would voluntarily stake in such an uncertain situation? Undoubtedly, it is ETH believers.

Most people who stake ETH are long-term investors who are in no rush to sell, especially now that the price of ETH is lower.

Short-term investors prefer more liquid staking solutions, such as Lido. I used Nansen and Etherscan to find that the ETH staking ratio of this type is only 35%.

In addition, 30% of ETH staked comes from independently operated validators. Independently operated validators are very complicated, and only believers in ETH will do so, and they are even less likely to sell.

Summarize:

I don't think the unlocking of ETH will lead to a massive sell-off as the unlocking process will take several months and will be released slowly, and most stakers will not sell as a result.

Original author: DeFi Degen Korpi

Original translation: Aishe Li, BlockBeats