$26 Billion Worth of Ethereum to Soon Be Unlocked Could Tank Prices Much Further

Despite years of constant delays in the release of the Ethereum Consensus Layer, the foundation confirmed earlier this week that it is now expected to be launched as soon as August 2022.

Many have referred to this event as “the Merge”, and there’s been much excitement surrounding this event. As we know, Proof-of-Work is a system that essentially requires lots of effort and computing power to keep the applications secure. Even the developer of Proof-of-Work, Hal Finney, has voiced his concerns over his invention, due to the huge energy consumption required.

While Proof-of-Stake will be a huge upgrade to Ethereum, it does come with some concerns as well. For instance, there is currently over 13 million Ethereum staked in ETH 2.0, worth nearly $26 billion.

Once the merge is complete, this $26B will be unlocked, and flood the market as investors unstake and potentially sell the news. With the current bear market now in play, and lots of fear consuming the space, we could see an even larger decline in the coming weeks and months.

However, not everyone agrees that this could result in a crash. A Self-proclaimed DeFi educator and member of ‘DeFi Omega’, Korpi87 broke down the potential impact of The Merge and the resulting unlocking of millions of ETH in a lengthy Twitter thread.

Staked ETH won’t be unlocked right away

Korpi pointed out that “the Merge won’t enable withdrawals,” as that is “planned for another Ethereum upgrade” slated to occur after roughly 6 months to one year. Korpi explained further that:

“To withdraw $ETH, a validator must exit the active validator set but there is a limit to how many validators can exit per epoch.

There are currently 395k validators (active + pending). If no new ones are set up (highly unlikely), it will take 424 days for…