The long-awaited Shanghai/Capella (Shapella) upgrade went live on April 12, marking a pivotal moment in Ethereum’s evolution. For the first time since staking began in December 2020, validators can finally withdraw their staked ETH and accumulated rewards. While this milestone brings new flexibility, the process is gradual and governed by network constraints. This guide breaks down how ETH withdrawals work, what the Shapella upgrade means for stakers, and how it could shape Ethereum’s future.
What Is the Shapella Upgrade?
At 22:00 UTC on April 12, Ethereum activated two coordinated upgrades:
- Shanghai – a hard fork on the execution layer that enables ETH withdrawals from the Beacon Chain.
- Capella – an update to the consensus layer (Beacon Chain) that introduces withdrawal functionality for stakers.
Together, they’re commonly referred to as "Shapella" — a portmanteau of Shanghai and Capella. The most anticipated feature? The ability to withdraw staked ETH and staking rewards, ending over two years of lock-in.
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Ethereum’s Journey to Proof-of-Stake
The Beacon Chain and the Merge
On December 1, 2020, Ethereum launched the Beacon Chain, initiating its transition from Proof-of-Work (PoW) to Proof-of-Stake (PoS). Instead of miners solving cryptographic puzzles, validators now secure the network by staking ETH.
For nearly two years, the Beacon Chain ran parallel to the Ethereum mainnet. That changed on September 15, 2022, when the Merge occurred — merging the Beacon Chain with the execution layer. Ethereum officially became a PoS blockchain, reducing energy consumption by 99.95%.
Despite this major upgrade, one critical feature remained missing: withdrawals.
How ETH Staking Works
To become a validator, you must stake 32 ETH. Validators are responsible for proposing blocks and attesting to the validity of transactions. In return, they earn staking rewards — but they also risk slashing if they act maliciously or go offline.
When staking began in 2020, 32 ETH was worth around $19,000. By late 2021, that same amount peaked at over $128,000. However, many early stakers are now underwater — 65% of stakes were worth less in April 2023 than when deposited, according to Dune Analytics.
Until Shapella, there was no way to exit. Stakers had to wait — sometimes years — with no liquidity.
Alternatives to Solo Staking
Not everyone can afford 32 ETH or manage validator infrastructure. Fortunately, several accessible options exist:
Staking-as-a-Service (SaaS)
Platforms like Allnodes and Kiln allow users to stake 32 ETH while handling node operations. You provide the funds and keys; they run the validator.
Staking Pools
Pools let users contribute smaller amounts — sometimes as little as 0.01 ETH — combining resources to meet the 32 ETH threshold. Providers like Binance and StakeFish manage operations and typically take a ~10% fee from rewards.
Liquid Staking
Liquid staking is the most flexible option. Protocols like Lido Finance issue stETH — a token representing your staked ETH plus rewards. These tokens are:
- Liquid: Tradable or used in DeFi immediately.
- Yield-bearing: Can be deposited into lending platforms or liquidity pools.
- Redeemable: Can be swapped back for ETH post-Shapella.
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Ethereum Staking in Numbers (as of April 2023)
- 579,000+ validators active on the network.
- Over 18.5 million ETH staked — roughly 15% of total supply.
- Lido Finance controls 31% of all staked ETH.
- 33% of staked ETH comes from liquid staking.
- 27% is staked via centralized exchanges like Coinbase and Binance.
Despite fears of mass exits, fewer than 5% of validators have requested full withdrawals. Most withdrawals so far are for accumulated rewards.
Understanding ETH Staking Rewards
Ethereum’s reward system is dynamic — not fixed like many PoS chains.
Base Reward Formula
The base reward per validator depends on:
- Their effective balance (usually 32 ETH).
- The total amount of ETH staked across all validators.
The formula: Base Reward = (Effective Balance × 16) / √(Total Active Stake)
As more ETH is staked, individual rewards decrease.
APR Trends
- December 2020: ~20% APR
- August 2021: ~6%
- April 2023: ~4.7% (e.g., via Lido)
While 4.7% may seem low, liquid staking unlocks additional yield opportunities — such as using stETH as collateral on Aave or providing liquidity on Curve.
Shapella: Enabling Withdrawals
Full vs. Partial Withdrawals
There are two types:
- Full Withdrawal: Exit entirely as a validator. Requires deactivating your node. Takes ~2 weeks due to exit queue limits.
- Partial Withdrawal: Withdraw rewards above 32 ETH. The validator remains active.
You cannot withdraw custom amounts — only full stakes or excess rewards.
Withdrawal Process
- Block proposers process up to 16 withdrawal requests per block (every 12 seconds).
- No gas fees are charged — withdrawals are treated as balance increases.
- Processing time depends on network congestion and queue length.
As of April 17, over 26,400 validators were queued for full exit — a backlog expected to clear in about two weeks.
Major Platforms’ Withdrawal Rollouts
Different providers activated withdrawals at different times:
- Coinbase: Enabled requests on April 13, one day after Shapella.
- Binance: Started processing on April 19.
- Lido Finance: Delayed until May for security audits.
Lido introduced a unique feature: Withdrawal NFTs. When you request unstaking, you receive an NFT as proof. You can burn it to claim ETH — or even trade it.
Market Impact After Shapella
Contrary to bearish predictions, ETH price rose post-upgrade — briefly touching $2,100, its highest since May 2022.
Key observations:
- Net outflow of 81k ETH in a single day (April 16).
- Kraken led withdrawals (46.1%), having exited staking services in February.
- Binance and Coinbase followed with 22.3% and significant shares respectively.
- Lido accounted for 63% of early withdrawals, though mostly reward-based.
Despite outflows, daily deposits continue. The real test will be whether new stakers offset those exiting.
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What’s Next for Ethereum?
Short-Term Outlook
- Withdrawals will be gradual, not sudden.
- Selling pressure is likely mitigated by steady demand and DeFi integration.
- New users may be attracted by the ability to unstake — increasing overall participation.
Long-Term Implications
- Liquid staking is expected to grow as users seek flexibility.
- Protocols like Lido are evolving — introducing modular architectures like the Staking Router to support diverse validator types.
- Ethereum’s ecosystem becomes more resilient with improved capital efficiency.
Frequently Asked Questions (FAQ)
Can I withdraw any amount of staked ETH?
No. You can only:
- Withdraw your full stake (32 ETH + rewards) by deactivating your validator.
- Or withdraw rewards above 32 ETH while staying active.
Partial principal withdrawals are not supported.
How long does an ETH withdrawal take?
Reward withdrawals: 4–5 days
Full withdrawals: Up to 2 weeks, depending on the exit queue and withdrawal credentials.
Do I need to pay gas fees to withdraw?
No. Withdrawals are processed as balance increases on the execution layer and do not require gas.
Why hasn’t Lido enabled withdrawals immediately?
Lido delayed mainnet withdrawals until May to complete thorough code audits, ensuring protocol safety after handling billions in value.
Is liquid staking safer than solo staking?
Both have trade-offs:
- Solo staking: Full control, but higher technical barrier.
- Liquid staking: More accessible and flexible, but relies on smart contract security and decentralization of the protocol.
Will ETH price drop due to mass withdrawals?
Unlikely in the short term. The withdrawal process is throttled by design, spreading out supply over weeks or months. Plus, new stakers may offset outflows.
Final Thoughts
The Shapella upgrade is more than a technical milestone — it’s a psychological turning point for Ethereum. By enabling withdrawals, it completes the transition to Proof-of-Stake and enhances trust in the network’s maturity.
While immediate market reactions are volatile, the long-term trend points toward greater liquidity, stronger DeFi integration, and broader adoption of liquid staking. For investors and developers alike, this is just the beginning of Ethereum’s next chapter.
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