Ethereum to Face Lengthy Withdrawal Queues for Staked ETH Amid the Shanghai Upgrade
The Shanghai (or “Shapella”) update to the Ethereum blockchain is coming soon. Users will have access to about $30 billion worth of ether that has been locked in the system since the end of 2020 thanks to the backward-incompatible hard fork.
Although it’s scheduled for next week, the procedure may take weeks to be carried out. Following the merge event in September, Ethereum’s transformation will be completed on April 12 with the release of the Shanghai update, which is linked with another upgrade called Capella.
Will Ethereum Surpass the $2000 Mark in This Process?
Many observers predicted that the momentum would be unstable following the upgrade. The price of Ethereum negate analyst predictions and remained steady. Recently, Ethereum received the Shanghai upgrade, which might start a positive trend. The weekly chart for the price of ETH has been showing a sluggish upward trend. Since it is currently close to its 30-Day High, a spike toward the 52-Week High of $3173 is possible. The asset price is currently up 2.5% during the midday session and trading close to $1914.
The bullish trend for ETH is expected to come to an end after reaching $2000. At around $1800, the asset price has started to recover. The 50 and 100 Daily Moving Averages are being traded above Ethereum. A favorable breakthrough in the DMA may occur, which might cause the asset price to reach a new high. The RSI of the ETH is close to 60 and has no slope. The RSI’s overall movement is neutral, which points to a long period of stability.
Ethereum Might Face Extended Withdrawal Requests
Users who staked ETH in the network — either as individual validators or through services like Lido Finance and Rocket Pool — are looking forward to the updates since they will soon be able to take out their assets and collected incentives. However, it’s possible that Ethereum users won’t be able to withdraw their money all at once. The extended requests for the withdrawal could force people to wait several weeks to withdraw their money, according to Andrew Thurman, a statistics analyst.
Thurman told: “When you look at the fundamentals, whatever the impact of withdrawals going live is, it’s going to play out over a period of weeks and not days.”
The Beacon Chain, an Ethereum-compatible parallel blockchain in charge of overseeing the staking process, went live in early December 2020, marking the start of the Ethereum 2.0 upgrading process. Validators were supposed to stake 32 ETH in order to run their own nodes, handle transactions, and sustain the network, which ensured a steady stream of blocks.
Third-party decentralized services like Lido Finance allow users to stake their ETH without having to run their own validator nodes, which helps meet demand. Users got an ERC-20 token called stETH in return for ETH deposits into the Lido Finance smart contract, which served as a staked version of the ETH.
Users got the same amount of stETH as they deposited in ETH, and the worth of stETH remained tied to the price of ETH (although with some swings). Thurman thinks that the “value proposition of projects like Lido may transform, but won’t change greatly” as a result of the Shanghai improvement.
He said: “Being able to use your staked ETH as a form of collateral in DeFi is hugely important for anybody who’s pursuing any kind of sophisticated interest or yield-bearing strategy. So, there’s still definitely a role for those tokens. But I think liquidity becomes slightly less important because withdrawals are open.”
Over 18 million ETH, or around $33.6 billion, have been staked and secured into the Beacon Chain among 564,000 validators. Validators’ current annual percentage yield (APR) is 4.4%, giving stakeholders a return similar to interest.
Users are asking about the estimated duration for acquiring their assets since they assume the withdrawal window to begin next week. The Ethereum Foundation states that a single block can process up to 16 withdrawal requests, for a maximum output of 115,200 per day.
Logically, it would require five days to complete every withdrawal. The maximum number of requests will probably cause this deadline to be extended. According to the analyst, it “may take the protocol weeks to months to handle unstaking requests.” Due to security examinations, Lido has stated that it may not authorize withdrawals until early to mid of May.
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