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Defi Educator Says $22 Billion in ETH 2.0 Funds Won’t Be Liquid Immediately After PoS Transition

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.

“I’ve noticed some people consider The Merge as a negative price catalyst due to a supposed huge [ethereum] unlock — This is wrong,” Korpi explained on Twitter. “Staked [ethereum] won’t be unlocked at The Merge. The Merge won’t enable withdrawals. This is planned for another Ethereum upgrade which may take place 6-12 months after The Merge. In other words, both staked [ethereum] and staking rewards will not enter the circulation for a long time,” Korpi added. The defi 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.

The defi educator Korpi continued his Twitter thread by explaining that the Ethereum 2.0 withdrawal process will be slow. “To withdraw [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 395k validators (active + pending). If no new ones are set up (highly unlikely), it will take 424 days for all of them to exit. Staked [ethereum] is often a never-sell stack.” 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.

What do you think about the Ethereum 2.0 contract closing in on 13 million ether? What do you think about Korpi’s statements and the slow unwinding process he explained? Let us know what you think about this subject in the comments section below.


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