Ethereum Shanghai Upgrade to Unlock 16 Million ETH

The imminent arrival of the Shapella upgrade on the Ethereum blockchain has sparked considerable speculation among investors and experts alike. With the upgrade set to go live on the Ethereum mainnet in just a few weeks, there is growing concern that the unlocking of withdrawal capabilities could trigger a massive selloff of the world’s second-largest crypto, Ethereum (ETH).

The Shapella upgrade, which combines the execution layer (Shanghai), consensus layer (Capella), and the Engine API, will allow users to withdraw their staked ETH for the very first time. Since the launch of the Beacon chain two years ago, investors have been staking their ETH in large numbers. However, with the Shapella upgrade unlocking the withdrawal capabilities, there are fears that this could lead to a mass exodus of ETH and, in turn, create selling pressure on the crypto.

State of Staking on the Ethereum blockchain right now

Although ETH is currently trading at close to $1,800 with more than 50% gains year-to-date, the ability of a user to withdraw staked ETH depends on the method chosen for staking. Validators need to stake a minimum of 32 ETH in the Beacon chain to participate in the block validation process, making it difficult for retail players to become validators. Numerous staking services and decentralised staking pools have emerged in the market to make it easier for retail investors to participate by allowing them to stake any minimum amount of ETH. These staking services aggregate ETH from several stakers and lock it into the blockchain. 

Individual stakers who have not utilised any staking services or pools can withdraw their ETH in two ways: partial withdrawals and full withdrawals. Partial withdrawals mean that stakers can withdraw the rewards received on their staked ETH. The rewards earned can be withdrawn instantly without any waiting period. On the contrary, complete withdrawals allow users to withdraw their entire balance, which includes the 32 ETH that was staked with the blockchain.

Users who have staked their ETH using a staking service have to check with their service provider about the process and timeline for withdrawals. Crypto exchange Coinbase, which offers staking services to its users, has announced that it will process the withdrawal requests 24 hours after the Shapella upgrade goes live. Likewise, Lido, the third-largest protocol for liquid staking, has announced that its users holding stETH will not be able to access their ETH until the protocol completes a security audit during a scheduled upgrade in mid-May.

Note: ZebPay does not offer staking as a service currently and be aware of any scammers attempting to use ZebPay’s name to promote such services. 

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