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Ethereum’s upcoming Shanghai upgrade, known as Shapella or Shanghai-Capella, is set to launch on April 12, concluding its two-year transition to a proof-of-stake (PoS) system.
The move will finally open up over 18 million ETH — worth roughly $34 billion — after a two-year lockup period to set up validator nodes. However, this move has raised concerns about staking withdrawals among Ethereum traders.
Ethereum validators can send withdrawal requests once the Shapella is live if the upgrade goes according to plan. However, the funds will not go directly to the traders’ pockets on the same day.
According to Flowdesk co-founder and CEO Guilhem Chaumont, the withdrawal queue is limited to only 115,200 sets per day.
This means that individual stakers who have staked at least 32 ETH (currently worth approximately $60,000) will have to wait at least two to three days to get their withdrawal requests processed. The wait time might be longer — up to weeks or months — for those who have staked through service providers like Lido or Coinbase.
Investors are also concerned about the potential impact of the upgrade on the Ethereum price, which currently sits at number two in market capitalization.
Prior to the upgrade, reports have shown that the number of active validators on the ETH network is dropping for the first time since September 2022 due to fears of what might happen post-upgrade.
Chaumont told Decrypt that many speculated the event would cause a massive sell-off in price, but the withdrawal queue’s limitations are likely to slow down the process and prevent a sharp, sudden dip in price.
“So while there may be sustained downward pressure on the price, unstaking is not likely to cause a sharp, sudden dip,” said Chaumont.
A similar statement came from Nansen data analyst Andrew Thurman, saying the price impact would be short-term and “a little bit more muted” than the community expected.
In the long term, Thurman asserted that Ethereum investors might act more bullish, especially with the increased use-case for cryptocurrency custody in business. Big banks such as Standard Chartered, JPMorgan Chase and CACEIS have grown increasingly interested in offering crypto custody services in recent years.
“Because suddenly you can custody ETH as a bank, or as one of these solutions, for low to no fees. I think that’s going to lead to a lot of locked up [ETH],” he said.
Positive outlook on Shapella upgrade
Despite fears and concerns over the Shapella upgrade, there are multiple reasons why some look forward to it.
This event marks Ethereum’s official transition from the proof-of-work (PoW) to proof-of-stake (PoS) as the method for running its blockchain.
Over the past few years, there has been extensive media coverage of the environmental impact and inefficiency of running large networks with PoW miners. Even small miners have found it uneconomical to mine major cryptos like BTC due to the dominance of larger mining operations.
Blockchain analytics system IntoTheBlock claims that this upgrade will bring significant advantages to the environment and provide technical improvements to the Ethereum network.
PoW mechanisms are costly in terms of equipment and energy consumption, which restricts access to mining and increases blockchain security. In contrast, PoS blockchains require less processing power to verify block data and transactions.
The upgrade includes reduced transaction fees — known as gas fees — during periods of high network activity, which will benefit Ethereum developers.
Two gas fee-related Ethereum Improvement Proposals (EIPs) are EIP-3860, which sets limits on gas costs in certain cases, and EIP-3855, which seeks to reduce gas fees for developers.
