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The Shanghai Update to Ethereum Makes It Simpler to Identify Criminals

2023-05-29 16:56:30

After Ethereum's Shanghai update, staking incentives have made it simpler for investigators to identify paradoxical conduct by ETH holders.


With the historic Merge event in September, Ethereum transitioned to a blockchain that uses proof-of-stake. Validators must stake their Ether in order to confirm transactions using the current system. With the historic Merge event in September, Ethereum transitioned to a blockchain that uses proof-of-stake. Validators are required to stake their Ether in order for transactions to be confirmed at this time. Code-named Shanghai, Ethereum's March update allowed stakeholders to finally withdraw their frozen Ether. 

Decentralized financing (DeFi), stablecoins, Bitcoin (through wrapped versions of BTC), and non-fungible tokens (NFTs) have all been "investment themes" for the Ethereum ecosystem. The network has started offering fixed-income assets as a result of the upgrade. Currently, there are many ways to use or earn money with Ethereum. They may be broadly divided into four investment themes, which are: a) decentralized finance (DeFi); b) stablecoins; c) Bitcoin (through wrapped versions of BTC); and d) non-fungible tokens (NFTs). The network started to provide fixed-income assets after Shanghai.

Unrisky Rate

One of the fundamental tenets of traditional finance (TradFi) is yield. The perceived risk of other financial assets increases or decreases in response to changes in yield. The reasoning for investment decisions is thus generally provided by changes in the benchmark rate established by the US Federal Reserve.

Ethereum Will Change The Investing Landscape

Because such fund movements might represent attempts to launder money, compliance experts analyze patterns in the risk-free rate to spot illogical movement of funds in capital markets. It is said that because money laundering's only goal is to conceal the trail of filthy money, those who use it do not actively pursue financial profits like conventional investors. The Shanghai upgrade may have improved the status of crypto forensics, since Ethereum's staking return represents the risk-free rate of the cryptocurrency ecosystem.

The Staking Benefits in Ethereum Make It Simpler to Spot Suspicious Conduct

It is crucial to think like criminals when developing solutions to identify layering, since they create intricate financial transactions to hide their tracks. Finding the illogical movement of assets is the tried-and-true method of revealing such conduct. This is also because the purpose of money laundering is not to make money.

We may create standard risk-reward structures using the benchmark interest rates for cryptocurrencies provided by Ether's post-Shanghai staking yields. Armed with this information, investigators can systematically identify financial activity that deviates from patterns in the benchmark rate.

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