Ethereum Is One Step Away From Staked ETH Withdrawals

By Sander Lutz

Ethereum’s Shanghai upgrade, which will enable the withdrawal of staked ETH, successfully rounded the final corner in the build-up to its much-anticipated April launch, the network’s core developers have confirmed.

The Goerli testnet, essentially a comprehensive dress rehearsal of Shanghai, launched late Tuesday, and finalized roughly 90 minutes later. According to multiple Ethereum core developers, a brief delay was caused by some validators running older versions of clients. Those validators were swiftly brought on board, though, allowing the testnet to successfully resolve.

There were no other issues of note with the testnet launch or its functions, leading one Ethereum Foundation developer to declare, “Mainnet comes next!” 

With Goerli up and running, validators can now simulate the process of withdrawing staked ETH from Ethereum. It was perhaps because the testnet only permitted transfers of fake money that the network at first struggled to attract enough validators to try it out. 

“One challenge with testnet validators is that, given the ETH is worthless, there’s less incentive to run a validator [and] monitor it,” Beiko wrote on Twitter. 

Soon, however, Shanghai’s financial stakes will become very real. Ever since Ethereum began its transition to a proof-of-stake model in which users stake ETH with the network to validate on-chain transactions, and are then rewarded for their contribution to Ethereum’s operation with newly generated ETH.

Since ETH staking debuted in late 2020, $29.22 billion worth of ETH has been deposited with the Ethereum network. That’s about 14.67% of all ETH currently in circulation. 

Those funds, however—and the rewards they’ve accumulated—cannot yet be withdrawn from Ethereum. Shanghai will enable that withdrawal capability, and by the looks of the Goerli testnet execution, that transition should go smoothly. 

When exactly that transition will take place, though, has been a matter of some contention. Perhaps due to the tremendous financial pressure to launch Shanghai and flood validators (primarily from intermediary firms offering staking services to retail users) with huge amounts of passively-generated profit, Ethereum’s core developers have done everything in their power to get the upgrade out the door as quickly as possible. 

In January, those developers removed other much-needed improvements to Ethereum from Shanghai in order to hasten its release. Around the same time, they even made the decision to avoid including minor technical tweaks with the upgrade, a move that some core developers criticized as an unwise sacrifice made at the expense of Ethereum’s long-term health. 

Earlier this month, core developers confirmed that—should Goerli launch on or around March 14—the real Shanghai upgrade could be expected to go live by sometime mid-April. That timeline appears to be sticking.

But while Ethereum staking withdrawals may go live in April, that doesn't mean users will be able to retrieve their funds immediately, or even that same month. Coinbase, whose staking service accounts for a large portion of the ETH currently staked on the network, cautioned on Wednesday that withdrawal requests could take months to complete, depending on user demand.

Editor's note: This article was updated after publication to include statements from Coinbase regarding its expected timetable for Ethereum staking withdrawal requests.

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