The long-awaited update that will allow you to withdraw coins locked in staking is scheduled for April
During a conference call on March 16, which was attended by all the main developers of Ethereum, it was decided that the update, codenamed Shanghai, will occur on April 12. Previously, Shanghai’s mainnet update was scheduled to take place in March.
After that, investors who have placed ETH coins in staking will be able to withdraw both the initially deposited collateral and what they have accumulated in the form of income for processing transactions on the blockchain according to the rules of the Proof-of-Stake (PoS) consensus algorithm.
Proof of Stake (PoS) is the algorithm that powers blockchains such as Ethereum, Cardano, Solana, Tezos, and Algorand. This mechanism does not use the computing power of the miners to confirm transactions, but the staking coins provided by the validators.
As part of the update, Ethereum will activate several more useful technical features that developers and advanced users will surely notice. But the main focus of the crypto community is precisely on the possibility of withdrawals by validators and the potential impact of a significant influx of coins on the open market. Validators will have access to both the coins that they initially deposited as collateral, and those that they have accumulated in the form of income for processing transactions on the blockchain.
When the developers of Ethereum switched the network to the Proof-of-Stake consensus mechanism as part of the Merge update (“Merge”), the network began to use validators instead of miners to add new blocks with transactions to the blockchain. According to the rules of the network, validators must contribute at least 32 ETH (more than $50 thousand at the exchange rate at the time of publication) to the contract for staking in order to participate in the process of confirming new blocks.
According to the official website of the Ethereum Foundation, as of March 16, more than 17.5 million ETH (approximately $29 billion at the exchange rate as of March 16) was blocked in staking with more than 549 thousand validators who take part in processing transfers within the Ethereum network, receiving a reward of the form of new coins. The amount of the minimum deposit of one validator is 32 ETH.
After the update is activated, about 1 million ETH ($1.6 billion) accumulated in the form of rewards alone can enter the market. This creates a risk of pressure on the price of the cryptocurrency, but simultaneously with the update, new participants may join the staking process, for whom the issue of access to assets was fundamental. Other cryptocurrencies running on PoS did not have a similar mechanism initially.
After the activation of the Shanghai update, it is likely that many of the network’s validators will begin to withdraw at least what they have earned in two years in transaction processing fees. Obviously, some of them will withdraw the collateral completely for the sake of greater control over their own funds during a period of uncertainty in the crypto market.
In its current form, the Ethereum blockchain, after switching to the PoS algorithm, lacked precisely the key function of withdrawing funds by validators, although the rest of the network is functioning properly. Other stakingable coins like Solana or Cardano didn’t have these restrictions in the first place.
How to stake your ETH
It all depends on how much you are willing to stake. You’ll need 32 ETH to activate your own validator, but it is possible to stake less.
Check out the options below and go for the one that is best for you, and for the network.
