What Stakers Need to Know About ETH Unlocking Post-Shanghai Upgrade

With the Ethereum Shanghai upgrade just around two weeks away, not everyone is clear on when ETH stakers will be able to withdraw their assets.

Shanghai Upgrade and ETH Unlocking

The Shanghai upgrade (also known as Shapella) is scheduled to occur at 05:27:35 AM on April 13 (Vietnam time), at epoch 194048, according to the Ethereum development team. So, when exactly can users withdraw their ETH once Shanghai is complete?

As of this writing, over 17.8 million ETH, worth approximately $32 billion, is locked in Ethereum's staking contract.

ETH Staking Methods

The answer depends on how users have staked their ETH since 2020. There are two main methods: becoming a validator directly or using intermediary platforms that provide staking services.

When ETH 2.0 staking contracts opened in December 2020, to become an Ethereum validator, stakers needed to lock up 32 ETH (around $58,000 currently) on the Beacon Chain. Since not everyone has 32 ETH, staking solution projects began to emerge.

Prominent Staking Solutions

• Lido Finance (LDO): Lido allows users to stake any amount of ETH they have. The protocol pools ETH from multiple users and locks it on the blockchain, participating in transaction validation like other validators.
• Centralized Exchanges: Another option is staking through exchanges that offer this feature, such as Binance or Coinbase.

ETH Staking Unlocking Timing Post-Shanghai

For Independent Validators

For validators running independently, Shanghai will automatically unlock assets after the upgrade is complete. However, stakers will have two options for withdrawing their assets:

• Withdraw Rewards Only: This pertains to the profits exceeding the initial 32 ETH staked, which can be withdrawn immediately.
• Withdraw Entire ETH: This means closing the node and withdrawing both principal and profits from the blockchain. This option will take longer as validators must submit a withdrawal request and enter a withdrawal queue, with ETH being unlocked gradually.

Although withdrawing rewards only is faster, it still depends on the number of withdrawal requests at the time. There are only 16 reward withdrawal requests per slot, with each slot occurring every 12 seconds. Thus, withdrawals could take several hours.

For Stakers via Intermediaries

Stakers using intermediary platforms will need to check with their service providers about the ETH unlocking schedule, as each platform will have a different timeline.

• Coinbase: Early this month, Coinbase announced it would process withdrawal requests within 24 hours after Shapella completes. However, the US exchange noted it cannot guarantee the exact wait time for Ethereum withdrawal requests.

• Lido Finance: As the largest liquid staking protocol, Lido Finance has indicated that ETH stakers might not be able to retrieve their ETH immediately but will need to wait until Lido’s upgrade in mid-May. This delay is to ensure the protocol passes security checks.

• Rocket Pool: The Rocket Pool (RPL) staking protocol has not yet announced when it will unlock ETH for users.

Estimated Withdrawal Volumes

It is estimated that approximately 1,800 Ethereum validators will be allowed to fully withdraw their staked ETH daily, equating to around 57,600 ETH (approximately over $100 million at current rates). Additionally, other validators will also be able to partially withdraw their staked ETH, so the total amount of ETH withdrawn daily post-Shanghai could be significantly higher.

Validators can also notify their intent to withdraw staking without waiting for Shanghai. As of April 9, 1,622 validators have declared they will withdraw ETH after the hard fork, with a total amount of 51,000 ETH.