Ethereum has risen above $2,000 for the first time since August following a successful upgrade that ends the transition to full Proof of Stake (PoS).

The Shapella unlock upgrade went through during mid-night in Europe, removing a hurdle to the repricing of the new eth tokenomics.

That has taken years, starting with the launch on December 1 2020 of the then hybrid ethereum 2.0 PoS Beacon chain, a sort of half-way chain between testnet and main-net.

Stakers could stake, but not withdraw their stake or rewards. Meanwhile the network continued to be run by Proof of Work miners.

That’s until September 15th 2022 when the PoS Beacon chain became the main-chain, with the miners discarded completely.

This was a fundamental change in ethereum’s tokenomics because total rewards for security – for stakers or previously miners – fell to just 2,000 eth a day from ◊20,000.

That was and remains low enough to be covered by the daily burn, another upgrade in recent years that removes a portion of network fees paid per transaction from the supply by sending it to the 0x0000 burn address which doesn’t have a private key as it is the node’s or the network’s address, so no one can spend those funds.

Those upgrades in combination have made ethereum deflationary whereby total supply reduces generally, but stakers could still not withdraw the 32 eth amount or the reward, leaving room for some uncertainty where valuation or re-pricing is concerned.

Until today. The unlock upgrade now allows withdrawals of the stake amount and rewards, so completing the Proof of Stake transition and removing a more than two years long slight uncertainty.

Because now people can be sure they can withdraw their stake amount and their rewards, and excluding the queueing time it takes to join or withdraw from the staking pool, they can enter or exit at any time fairly instantly.

The queuing time varies depending on how many want to join or exit, but usually it is about a day or maybe two each way.

That means eth has become a proper hodl asset as it now gives yield in a sustainable manner because that yield, around circa 5% a year in eth, is paid through a portion of network fees from transactions.

There are other things on top, like Miner Extracted Value (MEV), which is now more stakers extracted but has remained MEV.

That can increase yield to maybe 8%, making eth different from bitcoin because it is no longer paying for its security through supply inflation, but effectively through network usage and demand.

If that usage is low then it would compensate with supply inflation, but even during the bear eth has generally been deflationary.

So closing then one of the longest running chapter in the still fairly short crypto history, as the planning for the PoS transition began in 2015, and the road to get there has been bumpy.

Some were there to see it all, but for newcomers, PoS was still very much on the drawing board in 2017, and was completely redesigned at the depth of the 2018 bear which made hodling during that time extremely difficult.

Since 2018, there probably hasn’t been a year when a prominent dev didn’t say PoS would launch later that year, giving rise to a meme: a circa 97 year old Vitalik Buterin announcing PoS has launched.

As coders might know however, it often feels like it will take just a day to code what actually takes a month or six weeks.

And here there was no guidance, no github copy pasting, no ChatGPT to ask to write it up. Instead they created those githubs that will be copy pasted, and the code that ChatGPT will rely on.

For that, the devs deserve congratulations. It did all work out in the end, and so now we can have our spring fun and look forward to the summer holidays as a major milestone in all of crypto has been achieved.

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• Source: https://www.trustnodes.com/2023/04/13/ethereum-crosses-2000-on-successful-upgrade