Ethereum activates the withdrawal functionality of staked ETH through Shapella
The Merge has transitioned to Proof of Stake consensus, and efforts are underway to do the same for Shapella. It is this attempt that has brought out functionality that the ETH community had been waiting for 28 months. That was the time when the staking service went live on the network.
Ethereum has now enabled the withdrawing process for users and validators, allowing them to withdraw their staked ETH. This can be done either partially or in full amount. This marks a major milestone post the implementation of The Merge and the beginning of the staking mechanism on the network.
The upgrade happened at epoch 194,048. Proof of Stake consensus has served them fairly well to the community by lowering energy consumption by 99.9% and increasing the issuance by 90%. With withdrawals enabled, there is a rising question if the staked ETH would be withdrawn to cause a major fluctuation in the price of ether.
According to Darren Langley, the exodus is less likely to happen since most of the validators will choose to restake the rewards that they have accumulated over time. Darren has also said that there is no evidence to suggest that operators will withdraw their staked ETH from the network. We do not see exit build-up, stated the General Manager of Rocket Pool while interacting with the media.
Superphiz has echoed a similar tune to say that with staking being de-risked, institutional investors are more likely to experiment with the process.
This possibly signals that other participants who agreed to take withdrawal risk with Shapella may choose to stick around for a while. Nonetheless, there is a limit in place imposed by the ether team, allowing only 1,800 validators to withdraw the staked ETH. This roughly represents less than 0.05% of the supply of ether, equaling 57,600 ETH.
ETH is exchanging hands with a price increase of 20% in the last 30 days. The introduction of the upgrade to Shapella is predicted to bring a bearish mood within the community, with the price falling for a few days. There is no word on how it will perform in the future or after experiencing the downward slip, but it is safe to assume that the volatility will come into play and bring the price back to the desired number.Markets are seeing ETH being traded at $1,992.56 at the time of drafting this article.
There is a possibility that stakers may refuse to withdraw simply because they entered the network at a much higher price. Meaning a fall would cause them loss, something that they are not up for. Mark Monfort, the Director of NotCentralised, has said that the current price of ether is lower than what most of the stakers staked their funds for.
Therefore, it could limit the impact on the macro level for the ether community. Another perception is that a lot of stakers, or holders, are on the network for a long time to have better profits. Withdrawing their staked ETH will only distract them from the long-term goal.
