$22 Billion Funds in ETH 2.0 to Not be Liquid Immediately after PoS Transition

The Ethereum network recently tapped a new all-time high where its hash rate is concerned and it is moving closer to making its transition to the proof-of-stake consensus algorithm. The ETH 2.0 contract boasts about 13 million ether and at the time of writing, this has a value of around $22 billion. However, it was recently disclosed by decentralized finance (DeFi) educators that after the network completes its transition, this $22 billion worth of funds will not be unlocked right away until there is an upgrade. As of June 4th, 2022, the total number of ether is around 12,875,941, and the funds are taken from numerous ETH validators.

Anyone can become a validator on the ETH 2.0 contract, as long as they have 32 ETH. A solid number of validators add their funds to the contract every day, which means that the value of the total funds locked will continue to increase. In the last 24-hour period, more than two dozen deposits were made by validators of 32 ETH each, which has a value of about $56,684 according to the exchange rate. Unfortunately, this value will be locked and it will not become liquid for a while.

This means that validators who deposit 32 ETH will not be able to access these funds until plans have been made for after the transition to the PoS algorithm. Korpi, the decentralized finance (DeFi) educator recently published a thread about this. A lot of people had assumed that the 12.7 million ether would be immediately accessible after The Merge. Korpi said that a lot of people had regarded this transition as a negative price catalyst because they thought that it would unlock a huge amount of Ethereum. If such a huge number is dumped together, it could lead to a price crash.

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But, Korpi elaborated that the staked ether will not be unlocked and withdrawals will not be enabled after The Merge. Another upgrade is expected in the next 6 to 12 months and after that, the funds will be made available. This means that it will be quite a while before the staked ether as well as the rewards become part of the circulation. The defi educator also said that not all of the staked Ethereum will be released right away. Even after withdrawals have been enabled, the unlocked funds will be slowly released. It could take about a year, or even several months.

In other news, a new all-time high was achieved by Ethereum’shashrateat a block height of about 14,902,285. The ETH transaction fee had reached a low of 10 months back in May because transaction costs had gone below $3. Preston Van Loon, the software developer for Ethereum, said at a recent conference that The Merge could take place as early as August. VitalikButerin, the founder of Ethereum, also confirmed that The Merge was scheduled for May, but did say that there could be a possibility of delays.