"The Significance of Ethereum’s Shanghai Upgrade and its Impact" BitMart Off-the-Chain AMA #3

Ethereum’s Shanghai upgrade is getting closer, which is a note-worthing upgrade for ETH stakers or hodlers, all crypto traders and Web3 builders. In BitMart's 3rd Off-The-Chain Twitter Space AMA, we invited experts in the Ethereum and DeFi ecosystem to discuss the significance of the Shanghai upgrade and its impact on DeFi and the overall Ethereum ecosystem.

Hosts:

BitMart @BitMartExchange

Fenbushi Capital @fenbushi

Panel 1:Ethereum Shanghai Upgrade

Moderators:

Peter Yang @PYneer, Managing Director at Fenbushi Capital

Victoria Feng @victoria3364, VP of Business Development at BitMart

Speakers:

Mirko Schmiedl @berlincrypto, CEO at Staking Rewards

Curtis Oh @curtohh, Business Development at Staked (Kraken)

Benjamin Thalman @builder_benny, ETH Analyst at Figment

Kirill Kutakov @stakewise_io, Co-Founder of StakeWise

Adam @ssv_network, SSV Network

Panel 2: Current Trends in DeFi

Moderators:

Kaimin Hu @0xkmh_D, Chief Business Officer at BitMart

Chloe Wang @Chloeeewrx_, Public Relations at Fenbushi Capital

Speakers:

Curtis Schlaufman @cschlauf , Global Head of Marketing at Enya Labs, Core contributor to Boba Network

Cole Kennelly @ColeGotTweets, Founder of Volmex

Daniel T. @DanielVerilog, Co-Founder of Verilog Solutions

Lin Yuan @lyuan2003, CEO at DeSyn Protocol

Sonali @Sonaligio, Head of Relations at DeFiYield

Jack He @jackdrift4M, Founder of Aspecta

Panel 1: Ethereum Shanghai Upgrade

Peter Yang (Managing Director at Fenbushi Capital): What will happen when the Shanghai upgrade is completed and what is its significance? Additionally, what other upgrades can we expect following the completion of the Shanghai upgrade?

Kirill Kutakov (Co-Founder of StakeWise):

The Shanghai upgrade is a key moment for Ethereum as it marks the final switch to a proof of stake system, allowing ETH stakers to make full or partial withdrawals of their validator earnings in liquid form. This creates a clear path for individuals to stake and receive earnings, increasing confidence in the system. The event is considered important as it provides assurance to individuals to participate in staking, thanks to the exit route. Despite the existence of liquid staking protocols, significant interest exists from capital waiting to participate. Withdrawals will encourage larger stakers to join, but some individuals view the Shanghai fork as a negative factor, leading to potential selling pressure from unlocked Ethereum.

Benjamin Thalman (ETH Analyst at Figment):

The upcoming Ethereum upgrade will allow validators to withdraw their ETH assets, resulting in partial withdrawals and higher yields for users. This will also lead to higher fees for the treasury and the possibility of auto-compounding. While the full impact of the upgrade is yet to be seen, it is expected to drive increased rewards and fees. The Shanghai upgrade focuses on withdrawals, with two options — partial and full. The next developments in the Ethereum pipeline are Proto-danksharding and the EVM object format, aimed at improving scalability and network efficiency.

Peter Yang: How will the upgrade affect instruments such as liquid staking derivatives and what will be the key reaction from its providers? Will there be any impact on other protocols, especially L2s?

Kirill Kutakov:

The full impact of the upgrade is unknown but expected to increase rewards and fees. Despite the ability to withdraw ETH, liquidity will still be crucial for price discovery and asset tradability. The development raises questions about its impact on the crypto market competition. Providers such as Coinbase and Binance, who offered discounted tokens in liquid form, may see a decrease in market share as tokens can now be redeemed for ETH. The extent of these changes remains unknown.

Adam (SSV Network):

The growth of liquid staking derivatives (LSDs) has gained attention in the crypto space. Companies such as Coinbase and Illuvium offer LSDs, highlighting their increasing importance. A trend towards specialization in LSDs is emerging, with projects like StakeWise V3, Lido V2, and RPL focusing on open access and liquidity. The SSV Network aims to provide a secure, decentralized infrastructure layer for LSDs and staking pools, with a goal of open access for all users. With a separation between LSDs and infrastructure layers, users will have more freedom to switch projects and receive rewards directly.

Curtis Oh (Business Development at Staked):

The primary benefit of LSDs is capital efficiency. Withdrawal availability shifts focus to depositing into DeFi protocols to earn returns beyond the 7% from staking. This is driven by a desire to increase returns through lending and liquidity pools, leading to higher returns. It’s also worth considering if there is a limit to the number of validators that can come online, which is currently around 900 a day. If the queue is long, LSDs may be valued at a premium due to the time it takes to start earning from staking.

Victoria Feng (VP of Business Development at BitMart): What advice do you have on how to select which platform to ETH staking? And any specific details related to the Shanghai upgrade people should be aware of?

Mirko Schmiedl (CEO at Staking Rewards):

Now is a great time to stake as the Shanghai Upgrade has reduced staking risk. There’s much more stake to be unlocked in the future, with liquid staking becoming more popular. There are staking solutions like StakeWise, Rocket Pool, Lido, and others to get started. Running your own validator requires more effort but supports network decentralization and security. Staking allows everyone to contribute to network security and decentralization. It’s important for those who want to stake to do proper research on the provider or service they are using and make sure they are familiar with it.

Adam:

The staking of ETH is becoming increasingly specialized, with tailored solutions for various users. Lido is a popular platform that caters to both retail and institutional stakers. With the Shanghai Upgrade, there will be more innovation and development in staking solutions, offering users a wider range of options. However, as the Ethereum industry grows, government scrutiny will also increase. It is important for users to prioritize staking services that prioritize decentralization and improve the overall health of the Ethereum ecosystem, with a focus on user safety and security.

Panel 2: Current Trends in DeFi

Kaimin Hu (Chief Business Officer at BitMart): How does the Ethereum Shanghai upgrade fit into the wider context of innovation and growth in the blockchain and DeFi space and what impact do you think it will have on the industry as a whole?

Curtis Schlaufman (Global Head of Marketing at Enya Labs, Core Contributor to Boba Network):

Boba Network sees the trend of cheaper and faster blockchain transactions as a positive for Layer 2 (L2) solutions. However, many L2s face challenges as Ethereum improves since they are not fully decentralized. Companies like Optimism, Arbitrum, and Boba Network will need to adapt and find new business models that are efficient, scalable, and generate revenue. This drives user value but also requires innovation in the ecosystem, such as gaming, infrastructure, or DeFi products. The upgrades are focused on the economic perspective, pushing companies to focus on user-friendly interfaces and experiences to encourage mass adoption. Overall, the industry is being driven towards greater efficiency, scalability, and user-centered design.

Daniel T. (Co-Founder of Verilog Solutions):

The Ethereum Unlock is an important event in the Ethereum network, but it’s just one piece of the puzzle in the overall growth and development of the Ethereum ecosystem. The market forces, sell pressure, and liquidity will play a significant role in determining the short-term price of Ethereum, but the focus should be on the long-term vision and the many exciting protocols built on top of Ethereum. While investing in Ethereum can be risky, it’s important to weigh the long-term potential benefits of the network and focus on strategies that support the overall health of the Ethereum ecosystem.

Cole Kennelly (Founder of Volmex):

The Shanghai Ethereum Upgrade is expected to boost staking activity and increase confidence in the Ethereum ecosystem and DeFi. The flow of ETH staking is expected to improve and result in more staking derivatives and DeFi activity, leading to long-term increased staking and lower risk. This is considered bullish for Ethereum and it’s exciting to see the potential increase in liquid staking derivatives and DeFi activity.

Chloe Wang (Public Relations at Fenbushi Capital): What are your perspectives on the challenges and opportunities facing the DeFi industry in 2023, and what are your projections and foresight for the future for DeFi?

Jack He (Founder of Aspecta):

Aspecta focuses on building an AI-generated identity ecosystem for various applications, including DeFi. We see the need for a reputation system and user-centric identity system to support DeFi’s development. The intersection of identity and DeFi projects will bring significant improvement through access to user-centric data. Aspecta looks forward to supporting DeFi innovation as an identity project.

Lin Yuan (CEO at DeSyn Protocol):

The upgrade of Shanghai will have a significant impact on the asset management industry. The new system will provide a more diverse and liquid deposit option, allowing for more interesting products to be created and offered to customers. Our focus will be on providing leverage staking in ETFs, allowing customers to receive three times the return on their investment. This will make it easier for both Web2 and Web3 users to enjoy staking returns, even during bear markets. The increased diversity will be beneficial for asset management. This is our perspective on the matter.

Sonali (Head of Relations at DeFiYield):

As DeFi continues to grow in popularity, the importance of security in the space has become increasingly evident. The recent events of Terra Luna’s crash and FTX’s collapse highlight the need for stronger measures. In response, our company is focusing on security as a key priority in the DeFi yield space. We are introducing innovative security tools, such as “The Shield,” which acts as an antivirus for portfolios, scanning for high-risk vulnerabilities and allowing users to revoke access from the dashboard. As the DeFi market expands, it is crucial to provide users with the tools necessary to ensure their investments are secure. We are committed to leading the way in DeFi security.

Curtis Schlaufman:

At eNeo Labs, we prioritize compliance in the face of upcoming regulations, especially with the SEC investigating the prevention of Coinbase customers from staking crypto assets. To ensure compliance and minimize potential risks, we collaborate closely with the Boba Network. Our team includes a traditional finance professional who entered the crypto world through Coinbase and explored DeFi, but realizes that regulatory restrictions could impact market participation and liquidity. Our goal is to improve the DeFi user experience and drive adoption by addressing the confusing interfaces often associated with web3 and exploring alternative solutions such as decentralized exchanges like Uniswap.

Chloe Wang: Are there any upcoming developments or updates that you would like to share with the audience or give a little sneak peek of?

Cole Kennelly:

Volmex is launching a new derivatives exchange in the coming months, offering leverage and various features. Stay updated with Volmex by following them on Twitter and visiting their website for more information. Get ready to trade volatility, hedge, diversify, and speculate with this new platform.

Daniel T.:

Be cautious during big events, as fraud and scams become more common. Protect yourself by using a hardware wallet and being wary of air-drops and random interactions.

Curtis Schlaufman:

The biggest news recently is that the Uniswap community has voted to deploy Uniswap V3 on Boba ETH, a big development that will be live in the next couple of months. Follow updates and be prepared for the launch. Additionally, account abstraction will also be applied across all instances.

Jack He:

Aspecta has big plans in the coming months, with a public launch of our identity ecosystem expected at the end of March. Follow our progress on Twitter and stay tuned for updates. We’ll also be co-hosting the Stanford University Hackathon and participating in ETHDenver, where we hope to collaborate with DeFi projects.

Sonali:

We recently launched Shield, an advanced smart contract scanner with APIs to enhance DeFi security. The scanner detects potential vulnerabilities and our browser extension alerts users of high-risk contracts before investment. Our DeFiYield platform is launching updates such as a browser extension, cross-chain bridge, and a DeFiYield app for Android and iOS. The app tracks portfolios from 49 chains and central exchanges.

Lin Yuan:

Decentralized asset management protocol to launch staking series in Q2, in partnership with Fenbushi Capital. Expect better returns and convenience for individuals and institutional investors.

Thank you all for joining the 3rd episode of a series of excited Off-the-Chain Twitter Spaces, and we would like to invite you to join our future ones to discuss and learn more about the industry and market trend. We look forward to hosting you!

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