Ethereum Celebrates Historic Milestone with Shanghai Upgrade
Staking Withdrawals Are Now Possible
Shanghai Is Live
Ethereum has achieved a significant milestone with the completion of its Shanghai upgrade, marking a new era for staking withdrawals. The Shanghai hard fork, also known as "Shapella," was activated at 22:27 UTC, enabling users who staked their Ether (ETH) to secure and validate transactions on the blockchain to withdraw their funds.
This hard fork is a historic moment for Ethereum as it concludes the multi-year transition to a full proof-of-stake (PoS) network.
The Transition
Before the Shanghai upgrade, Ethereum operated using a proof-of-work (PoW) consensus mechanism, similar to Bitcoin. However, with the recent transition to PoS, users have been unable to withdraw their staked Ether or claim rewards. The introduction of staking withdrawals is a critical component of the new PoS system.
Despite speculation that the Shanghai hard fork would tank ETH prices, the token is up 6% since the upgrade and it reached the $2,000 line for the first time since May 2022.
Vitalik and the Future
Approximately 4,000 people attended the Shapella Mainnet Watch Party hosted by Ethereum Cat Herders, where Ethereum co-founder Vitalik Buterin commented on the future of the platform.
He emphasized that while significant developments are still necessary, the most challenging and rapid aspects of Ethereum's transition are complete. The next focus for Ethereum will be scaling, aiming to make transactions faster and more affordable.
Proof of Stake and Validators
The switch from PoW to PoS brought about the creation of validators, individuals who stake at least 32 ETH to help secure the network and validate new data blocks. Validators can now choose to make partial or full withdrawals of their staked Ether and rewards. Partial withdrawals allow users to claim their rewards while keeping their original stake, whereas full withdrawals enable validators to redeem their initial 32 ETH and all accumulated rewards.
Staking Services
Different staking services have varying timelines for processing staked ETH withdrawals. Coinbase announced that they would begin processing withdrawal requests for their users approximately 24 hours after the Shanghai upgrade's completion. Lido stated that stakers would not be able to access their withdrawals until a protocol upgrade scheduled for May.
State of Liquid Staking in Ethereum
Ethereum's liquid staking market is led by major providers like Lido, Coinbase, Rocket Pool, and Frax.
Lido, with a total value locked (TVL) of $11.8 billion, maintains the largest market share at 74.25%. Coinbase Wrapped Staked ETH follows with 1.1 million staked ETH and a TVL of $2.36 billion, claiming a 14.49% market share. Rocket Pool and Frax Ether hold smaller shares, with TVLs of $915 million and $265 million, respectively. These liquid staking providers offer different LSD APRs, ranging from 4.80% for Lido to 3.47% for Rocket Pool.