ETH 2.0 Investors Losing Up to 55% on Locked Tokens

Charlie Taylor

With tokens stuck in staking, Ethereum 2.0 investors rack up unrealized losses of between 50% and 55%.

Staking on the Beacon Chain

Ethereum 2.0 is the most anticipated update across the blockchain industry in 2022. This update will transform the network for two years now. hybrid (PoW+PoS) of Ethereum fully in consensus by Proof of Stake (PoS). ETH 2.0 investors are betting on the success of the network that will emerge through a merge between the Main Blockchain (Proof of Work) and the Beacon Chain (Proof of Stake). This merge was named by the developers as “The Merge”. Beacon Chain has been running since December 2020 – until then the consensus was just PoW. And since November 2020, it was already possible for Ethereum 2.0 investors to stake their ethers (ETH) on the PoS network to earn income from validating blocks in this Chain and creating new coins, plus fees, both delivered to validators as a reward. and incentives for them to become stakeholders and lock in capital liquidity in the protocol.Passfolio

Until The Merge occurs, however, by becoming a validator node, depositing a minimum of 32 ETH in staking, it is still not possible to recover (withdraw) these amounts. They are stuck in the smart contract until Ethereum 2.0 becomes a reality and can be redeemed after a predetermined amount of time or blocks.

Know more: Centralization in Ethereum 2.0 worries its creator, Vitalik Buterin

ETH 2.0 investors report unrealized losses

As already explained in this article, unrealized losses occur when the current market price is below the average price of past purchases of a certain portfolio/address. They are called unrealized, as there is no consolidation of the loss with the sale, only a devaluation in the investor’s active capital. In the case of Ethereum 2.0 investors, on the Beacon Chain, there is not even the possibility of making these losses, as the staking tokens cannot be withdrawn for sale. According to the Glassnode report, when comparing the purchase price of coins that were deposited in the ETH 2.0 protocol ($2,390), with the market price at the time of publication of the report ($1,060), there is an unrealized loss of ~55% for the network validators.

ETH 2.0 investors' lossesSource: Market Pulse – Glassnode At the time of writing, ether (ETH) is trading at around $1,200, which slightly improves the picture for future network stakeholders, but still results in losses of around 50% . These investors have put their own capital at risk, betting on the success of The Merge and now all they can do is hope the development is a success and the market accepts the very important changes that will come for Ethereum 2.0.

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