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Going by the numbers, it seems like many ether (ETH) stakers have decided to hold onto their coins. Although several analysts predicted the just-completed Ethereum Shanghai hard fork (along with the separate Capella upgrade, together known as Shapella) would be a sell-the-news moment, ETH has actually climbed to eight-month highs. The second-largest crypto by market capitalization was trading above $2,000 for the first time since last summer, after gaining ~3% during trading hours in Asia.

What this says about the viability of Ethereum, and the outlook for the price of ETH, is an open question. Shanghai, the backwards-compatible hard fork, unlocked the ability for Ethereum stakers to withdraw tokens they pledged to the Ethereum deposit contract used to validate the proof-of-stake network as well as the token payments they received for doing so. Many stakers initially pledged 32 ETH to become validators in 2020, and havent really had access to their coins since.

This article is excerpted fromThe Node, CoinDesk's daily roundup of the most pivotal stories in blockchain and crypto news. You can subscribe to get the fullnewsletter here.

So the 18 million-plus ETH currently staked (worth about $33 billion) has not led to a torrent of sales. Loyal CoinDesk readers likely knew the selling pressure on ETH was overstated. As Amphibian Capital CEO James Hodges wrote on Monday, the vast majority of ETH validators were in the red leading up to the event, making it unlikely theyd cash out at a loss. Now that crypto prices are rising, led in particular by bitcoin, which broke the important $30,000 psychological threshold this week, fortunes may reverse.

Whats most interesting for many is not how ETH tokens trade, but their synthetic counterparts known as liquid staking derivatives. These LSDs, as theyre often called (not to be confused with the entheogen) are essentially bearer instruments for staked ETH that allow users to trade an ETH proxy while still earning staking rewards. The biggest offerings from Lido, Rocket Pool, Frax and Stakewise all hit the market relatively recently. The question post-Shanghai is what role these assets will play.

LSDs still have tremendous value by allowing users to essentially double their holdings, for a fee. Put up ETH in a non-custodial platform and its still yours, along with a shiny new stETH or rETH or Coinbases cbETH. This makes these assets critical for creating and maintaining ETH liquidity (as well as part of the validation process). However, actual ETH has generally traded above the price of particular LSDs, in a similar way that you often see price discrepancy between a managed investment trust and its underlying assets (due to increased risk and fees).

The Shanghai update shows that Ethereum developers are continuing to successfully build out a network in real-time. Basic infrastructure is still being built on the main network, leaving opportunities for free-market alternatives to spring up in the wake. Initially allowing ETH stakers to participate in decentralized finance (DeFi), the total value locked in LSDs actually surpassed decentralized lending last month. The whole pie seems to be growing, which is good news.

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Why Didnt You Sell the News of Ethereums Shanghai Upgrade? - CoinDesk