Ethereum’s Shapella (Shanghai + Capella1) enables validators to withdraw staked $ETH positions for the first time since the Beacon Chain’s launch in Dec 2020. GSR_io dives into the implications of this liquidity event and surmises what may transpire.🔎
Withdrawals will be smoothed over a period of weeks to months due to Ethereum’s queuing mechanisms, in addition to the various lags that Ethereum staking service providers require to integrate support for withdrawals.
Shapella is a material de-risking event for ETH stakers as natively staked ETH is able to be withdrawn from the protocol. Even if there is a temporary dip in staked ETH, such de-risking should cause the percentage of ETH that is staked to grow over the mid-to-long term.Ethereum nodes seeking to participate in the network’s proof-of-stake consensus must deposit 32 ETH on the Beacon Chain to become a validator that proposes and attests to Ethereum blocks.
There will be two types of withdrawals once Shapella is introduced: partial withdrawals and full withdrawals. Partial withdrawals will occur on a routine basis, automatically withdrawing each validator’s excess stake to the specified withdrawal address. Full withdrawals, on the other hand, require the validator to signal a voluntary exit and wait through the exit queue before going through the withdrawal queue.
The exit queue parameterization specifies that a minimum of four validators can exit every epoch , but the actual per epoch validator churn allowed by the protocol grows as the size of the active validator set grows4. With ~564k active validators today, a maximum of eight validators can exit per epoch, but the protocol-allowed churn decreases as validators exit and the set becomes smaller.
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