Ethereum’s Shanghai Upgrade: Great Expectations, Mixed Results
Ethereum's recent network performance has not met the lofty expectations set by the highly-anticipated Shanghai upgrade that was implemented in April.
Despite the cryptocurrency community’s high hopes for this upgrade, the results have left many unsatisfied, as JPMorgan reported.
The transition from the proof-of-work to proof-of-stake consensus mechanism, known as the Merge, was expected to usher in a new era for Ethereum by dramatically reducing its energy consumption, which it successfully achieved by reducing energy usage by more than 99%.
However, despite this remarkable feat, the Ethereum network has not witnessed the surge in activity that was originally anticipated.
JPMorgan analysts, led by Nikolaos Panigirtzoglou, have voiced their concerns in a recent report. They have pointed out that while Ethereum’s energy consumption has plummeted, the supply of Ethereum has been contracting.
Furthermore, staking has seen a significant increase, growing by 50% since the Shanghai upgrade. Surprisingly, these positive developments have not translated into increased network activity.
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Crucial Ethereum metrics, including daily transaction volume, daily active addresses, and the total value locked (TVL) in decentralized finance (DeFi) protocols, have all experienced declines. These metrics are essential indicators of the network’s overall health and adoption, and their downward trends are a source of worry.
JPMorgan’s analysts attribute Ethereum’s lackluster performance to a combination of adverse factors that have affected the broader cryptocurrency ecosystem over the past year.
These factors encompass the collapses of platforms like FTX and Terra, regulatory uncertainty in the United States, waning interest in cryptocurrencies among institutional investors, and a reduction in venture capital funding.
Alexander Stefanov
Reporter at CoinsPress
Alex is an experienced finance journalist and a cryptocurrency and blockchain enthusiast. With over five years of experience covering the industry, he deeply understands the complex and constantly evolving world of digital assets. His insightful and thought-provoking articles provide readers with a clear picture of the latest developments and trends in the market. His passionate approach allows him to break down complex ideas into accessible and insightful content. Follow up on his content to be up to date with the most important trends and topics - stay ahead of the curve with CoinsPress.
