In the latest update, core Ethereum developers said the Shanghai upgrade will start in the first two weeks of April 2023. Once this upgrade is done, users will finally be able to withdraw their ETH staked on the network.
Previously, in January, the developer said the Shanghai upgrade would start in March 2023. It turns out that the time had to be pushed back from that estimate.
Developers still have to launch the Goerli testnet which is planned to be carried out on March 14. If there are no obstacles, the Shanghai upgrade could be completed by mid-April.
Goerli will be the first testnet to trial staking ETH withdrawals, fully and partially. Developers can also test smart contracts on Goerli using a cryptocurrency testnet called GoETH.
Once Ethereum transitions from proof-of-work mode to proof-of-stake model, users can stake their ETH on the network to become transaction validators. They will get incentives in the form of new ETH rewards.
Since ETH staking began in December 2020, there have been 17.5 million ETH worth $28.7 billion held on the Ethereum network. That amount is equivalent to 14.5% of all ETH in circulation.
However, the rewards obtained by the validator cannot be withdrawn. New withdrawals can be made after Ethereum upgrades Shanghai.
Because it was so eagerly awaited, the Ethereum developer admitted that he was continuing to work on the Shanghai upgrade as soon as possible. There are even some updates that have to be removed in the upgrade series so they must be added in the next upgrade in the future.
“It doesn’t feel like we are thinking about the long-term health of Ethereum. What we are thinking about is how can we do what the public wants at this time,” said one of the core Ethereum developers, Micah Zoltu, at a developer meeting last January, quoted by Decrypt.
To prevent a massive sell-off of ETH, the developers limited the number of validators that can withdraw ETH. The developer only allows 57,600 ‘partial withdrawals’, per day.
This ‘partial withdrawal’ allows the validator to withdraw only the rewards, but still leave their 32 ETH in the network. Moreover, to reduce the full withdrawal of ETH, the developer will also increase the waiting period so that there will be more validators in the withdrawal queue.
Biggest ETH Stakers
According to Dune’s data, the four biggest ETH stakers are platforms that provide staking services, namely Lido Finance, Coinbase, Kraken, and Binance. These four account for 56% of all ETH staked on the network.
Lido holds the largest amount of ETH staked, which is 5.4 million ETH with a market share of 31.20%. Lido works by asking its users to store ETH on its platform in exchange for token staking Ethereum (stETH) rewards that are worth 1:1 with ETH.
According to DefiLlama, the Shanghai upgrade makes Lido the largest decentralized finance (DeFi) platform with a total value locked (TVL) of more than $8.9 billion on its platform.
In January, JP Morgan analysts also estimated that crypto exchange Coinbase, which holds 2 million ETH, could earn an additional profit of up to $225 million to $545 million per year from staking ETH. This advantage is a breath of fresh air for Coinbase which was bloody facing last year’s crypto winter.
