Amid the bear market and the fall of FTX, the crypto industry is still struggling to get back on its feet as innovation and technological advancement continue.
However, the market has shown signs of improvement in the first week of 2023, with the Ethereum ecosystem leading the way. According to a report by blockchain data analytics firm Nansen, Ethereum liquid staking platforms have seen a significant increase in price in recent weeks.
Liquid Staking Protocols Spike as Staked ETH Hits ATH
Per the report, this surge is largely due to the upcoming Shanghai upgrade on the Ethereum network scheduled to go live in March. The highly-anticipated upgrade will enable investors to withdraw their assets currently locked in various staking protocols while significantly reducing the risks involved in staking ETH.
Just as the Merge that happened last year built up bullish momentum in the weeks leading up to the event, the Shanghai upgrade is currently driving massive hype within the crypto market.
According to Nansen, the governance tokens of several liquid staking protocols have jumped over the past week as hype builds up.
Lido, the largest liquid staking derivatives platform, is seeing an influx of large sums, with its native token increasing by 65% in the last seven days. Last week, Lido briefly surpassed MakerDAO to become the largest DeFi protocol in the market.
The official ETH2 staking contract is also recording impressive figures over the past few weeks, with a new all-time high of 15.9 million ETH currently being staked.
As anticipation for the Shanghai upgrade builds up, it will likely push the tokens of these liquid staking contracts to new highs, providing an opportunity for these platforms to grow.
Ethereum L2 Protocols Record Massive Growth
The Nansen report further pointed out that Ethereum layer 2 solutionssuch as Arbitrum and Optimism, have been gaining traction over the last couple of months, with the number of transactions on these chains increasing significantly.
The Polygon ecosystem is also not left out, with the number of daily transactions on the chain currently at approximately 3 million, which is 3x that of Ethereum. On the other hand, on-chain volume on the Ethereum network has slightly declined over the past few weeks.