Key Takeaways
- During the 9-month window between the Merge and Shanghai Upgrade, circulating ETH supply will continuously decrease.
- ETC and other Ethhash POW tokens may see multi-fold increases in hash rate.
- Decentralized GPU networks could pioneer the next wave of GPU mining narratives.
- Staking ecosystem will diversify beyond dominant players like Lido and CEXs.
- Protocols like Obol Network enhance validator network stability and decentralization.
- Withdrawable staked ETH post-Shanghai Upgrade reduces liquidation risks in looping strategies.
- Separation of staking rewards and fee revenue creates arbitrage opportunities.
- Expect proliferation of ETH-based financial instruments.
- DeFi protocols have strong incentives to enter liquid staking markets.
1. Fundamental Changes to ETH Economics
ETH's emission rate drops from ~4.2M annually under PoW to ~500K under PoS (currently 4% of staked ETH), potentially reaching 1.2-1.5M at 30% staking ratio. The Shanghai Upgrade introduces two distinct cycles:
Merge → Shanghai Upgrade (9 months):
ETH supply strictly decreases due to:
- EIP-1559 burns
- Locked staking deposits
- Non-withdrawable validator rewards
- MEV/fees being reallocated (not new supply)
Post-Shanghai Upgrade:
- Staked ETH becomes withdrawable
- Circulating supply determined by balance between burns and emissions
2. Miner Transition and GPU Futures
With ETH's 910 TH/s hash power migrating:
- ASIC Miners: Primarily shift to ETC; ETHPOW fork remains uncertain
- GPU Miners: Repurpose for decentralized compute networks (Akash, Render, etc.)
- Industry Impact: GPU manufacturers seek new demand drivers; utility mining emerges as sustainable model
👉 Best practices for GPU repurposing
3. Evolving Staking Landscape
3.1 Liquid Staking
Current market share:
- 33% Liquid Staking (Lido: 30%)
- 30.8% CEXs
- 26.4% Others
Evaluation Framework:
- Client diversity
- Receipt liquidity/stability (e.g., rETH vs stETH)
- Key management (smart contract vs multi-sig)
- Decentralization contribution
3.2 Enhancing Validator Networks
Solutions like Obol Network:
- Split validator keys among operators
- Reduce slashing risks
- Improve censorship resistance
3.3 Advanced Staking Derivatives
Looping Strategy:
5x leveraged position yields 25-40% APY (pre-Shanghai risks apply)
Post-Shanghai Opportunities:
- Staking receipts may flip from discount to premium
- Structured products leveraging deep ETH/stETH liquidity
4. DeFi Protocols Entering Staking
Examples like Frax Finance:
- Use staking receipts (fraxETH) as stablecoin collateral
- Reduce reliance on centralized assets
- Capture additional yield streams
5. Public Goods: Portal Network
ETH 2.0's lightweight client solution features:
- Stateless validation
- Mobile-friendly access
- Personal RPC endpoints
- Enhanced dApp connectivity
6. Future Horizons
Unaddressed opportunities:
- MEV solutions in PoS era
- Cross-shard communication protocols
- Danksharding implications
The ETH 2.0 transition continuously reshapes blockchain infrastructure, creating cascading effects across sectors.
FAQs
Q: When will staked ETH become withdrawable?
A: After the Shanghai Upgrade (~9 months post-Merge).
Q: What's the safest liquid staking option?
A: Protocols using smart contract-based key management and diverse client support (e.g., Rocket Pool).
Q: How does EIP-1559 affect ETH supply?
A: It burns transaction fees, potentially making ETH deflationary during high network usage.
👉 ETH staking strategies explained
Q: Can ASIC miners be repurposed?
A: Only for other Ethhash chains (ETC); most will become obsolete.
Q: What's the main risk of stETH looping?
A: Pre-Shanghai liquidation risks due to single exit path (DEX liquidity).
Q: Will Portal Network replace Infura?
A: No—it serves personal nodes while Infura handles institutional-scale RPC requests.