Supply Shock, Eth2 Locks over 1 million ETH, A Rally inevitable?
The official deposit contract of Eth2 Beacon Chain mainnet has now locked over 1 million ETH coins (translating to over $600 million) at spot rates. Interestingly, this is just a few days after Phase 0 of Eth2 activation as the network officially begins its transition from a Proof-of-Work system to a Proof-of-Stake consensus algorithm with staking. As an incentive, stakers receive a decent APR of over 20 percent. However, the APR will fall as more ETH are locked over the years.
The shift to Eth2 means staking and the inevitability of ETH lock up as prospective investors look for ways of tapping into the Proof-of-Stake reward system. Presently, over one million ETH coins are locked and more will be locked. At over 1 million, a decent amount of ETH has been withdrawn from the system and that’s not accounting for those in DeFi protocols like yETH and Maker, for instance, where users lock in their asset, lending for profits. At this pace, there is a likelihood of a supply shock helping pump prices.
Impact on the ETH Price:
Bullish. The more ETH coins are moped out from circulation, the more there is demand from ordinary users who use the coin for settlement or even in diversification via DeFi. Overly, this is supportive of bulls.
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