In the ever-evolving world of cryptocurrency, altcoin Ethereum launched its Shanghai upgrade nearly a year ago. It also made headlines at the time. The primary goal was to increase network efficiency and strengthen the emerging DeFi ecosystem. However, there is a report published recently by JPMorgan. Accordingly, it sheds light on Ethereum’s post-upgrade journey. It also produces a somewhat mixed result.
Shanghai upgrade: Transition of altcoin Ethereum
The Shanghai upgrade marked a pivotal moment for altcoin Ethereum. Accordingly, it initiated the transition from the Proof of Work (PoW) consensus mechanism to the Proof of Stake (PoS) consensus mechanism. This transformative transition promised less energy consumption and higher network efficiency, aiming to take Ethereum to new heights. But JPMorgan’s in-depth analysis paints a different picture.
According to JPMorgan’s findings, daily transactions for the altcoin Ethereum have dropped significantly since the upgrade, clocking in at around 12%. This drop in activity was accompanied by a nearly 20% decrease in daily active addresses on the blockchain. This also shows that user loyalty and participation is decreasing. Further complicating the situation, the Total Value Locked (TVL) across DeFi protocols also dropped by around 8%.
Factors affecting the performance of Altcoin Ethereum
JPMorgan’s analysts look at Ethereum’s performance following the Shanghai upgrade. Accordingly, he suggests that various external factors potentially contribute. The broader crypto market has experienced significant developments in the past year. It has struggled with bearish forces, including setbacks in projects like Terra and FTX. Regulatory action in the United States is at stake. Additionally, this situation initiates a period of uncertainty and caution among investors and users. All this puts additional pressure on the network activity of the altcoin Ethereum.
Another critical concern revolves around the decreasing supply of stablecoins in the altcoin Ethereum ecosystem. These stablecoins play a crucial role in providing liquidity and facilitating trading activities. The decrease in their supply could cast a shadow over network participation and DeFi protocols. On the other hand, it could potentially contribute to the observed decline. Moreover, despite staking activity increasing by 50% following the Shanghai upgrade, Ethereum continues to grapple with concerns about centralization. The emergence of liquid staking protocols such as Lido raises concerns about potential power concentration in the network.
There is hope on the horizon
Amidst these challenges, there is a silver lining for altcoin Ethereum. The blockchain is gearing up for another major upgrade known as EIP-4844 or Protodanksharding, which is scheduled to be implemented in the fourth quarter of this year. This upgrade looks at improving scalability. It also focuses on increasing transaction throughput and overall network performance. When we look at it as Kriptokoin.com, it aims to eliminate the deficiencies observed after Shanghai.
However, although JPMorgan’s analysts remain optimistic about this upcoming upgrade, they point out a different situation. Accordingly, they look at the bearish forces prevailing in the cryptocurrency market. They warn that these could still pose formidable hurdles on altcoin Ethereum’s path to recovery.
