Ethereum’s highly anticipated Shanghai upgrade, which was implemented in April, has not delivered the expected boost in network activity, as reported by JPMorgan.
Ethereum shows Post-Upgrade Metrics Decline
Despite the shift from proof-of-work (PoW) to proof-of-stake (PoS) with the Merge upgrade, the report reveals a decline in key metrics. Daily transactions have fallen by 12%, daily active addresses dropped nearly 20%, and the total value locked (TVL) in decentralized finance (DeFi) on the blockchain has decreased by almost 8%.
JPMorgan points to a combination of “bearish forces” over the past year, including the collapse of Terra and FTX, regulatory crackdowns in the U.S., and a shrinking stablecoin ecosystem, potentially overshadowing the positive effects of the Shanghai upgrade.
Staking and Centralization Concerns
While staking has increased by 50% since the Shanghai upgrade, concerns linger about the high prevalence of liquid staking protocols, like Lido, and the potential centralization risks they pose. JPMorgan highlights the potential for a meaningful increase in Ethereum network activity with the upcoming EIP-4844 upgrade, also known as Protodanksharding, expected to roll out in the fourth quarter of this year. However, it acknowledges that ongoing bearish crypto market forces could continue to be a challenge.