Since its announcement and addition to the Ethereum roadmap at the end of last year, Shanghai has been the anticipated and scheduled upgrade for Q1/Q2 2023. However, the Ethereum Foundation (EF) has realized the need to combine the consensus layer (Shanghai) upgrade and execution layer upgrade (Capella) into a single event, now known as Shapella.
According to the most recent announcements, the Shapella upgrade is expected to occur on April 12 at 22:27 UTC. It is one of the most anticipated upgrades, as it will allow withdrawals of ETH staked in the Beacon Chain deposit contract for the first time since its inception.
More about Shanghai (before it was called Shapella): https://blog.ethereum.org/2023/03/28/shapella-mainnet-announcement
Perhaps the most outstanding feature of Shapella, and one that Ethereum stakers will likely remember forever, is the moment that the activation of withdrawals on the Beacon Chain happens.
This support for validator withdrawals from the Beacon Chain to the EVM (via a new “system-level” operation type) will be possible through the EIP-4895 (Beacon Chain push withdrawals as operations), which is scheduled as part of the Shanghai upgrade.
However, in order to activate the withdrawal functionality in the scheduled Shanghai upgrade, some ETH stakers will need to update their validator keys as an essential requirement to request a total or partial withdrawal after the update.
As stated in the Staking Launchpad Withdrawals, “If your validator account still has BLS withdrawal credentials (0x00), a one-time message must be broadcast signaling which execution layer account should be used for all withdrawals.”
This update is only possible in the consensus layer (Capella) through BLSToExecutionChange messages, which allow validators to update their Ethereum withdrawal address to the appropriate prefix to receive ETH in the execution layer.
In this way, validators will need to migrate their credentials from BLS_WITHDRAWAL_PREFIX (0x00) to ETH1_ADDRESS_WITHDRAWAL_PREFIX (0x01).
However, carrying out this request for partial or total withdrawals on the Beacon Chain also requires introducing a system-level ‘operation’ to support validator withdrawals that are pushed from the Beacon Chain to the EVM (Ethereum Virtual Machine), the place where the Ethereum smart contract that govern Ethereum transactions resides, known as the execution layer, home to things like DEXs, CEXs, Dapps, etc.
If you are an ETH staker, there are some things to keep in mind before and after Shapella.
First, if you are running an Ethereum validator,
you should ensure that your withdrawal address is updated (as noted above) to receive withdrawal funds in your eth wallet. A quick way to verify this is to enter your validator index on
Staking Launchpad Withdrawals to check if your account is ready for withdrawals, or if you need to update your withdrawal address.
Second, you should keep in mind that staked ETH withdrawals after the Shanghai/Capella upgrade may take some time to be processed.
Also, depending on your ETH balance at the time of withdrawal, you can request a
total withdrawal (validator balance + accumulated rewards) or a partial withdrawal (accumulated rewards) on the Beacon Chain consensus layer.
As an added bonus for ETH stakers, there will be no eth gas costs for the withdrawals enabled in this upgrade.
More about ETH Staking: https://medium.com/ethereum-on-steroids/an-ethereum-staking-industry-overview-liquid-staking-defi-integration-mev-capture-and-dvt-54c0cd1e81f7
Withdrawal times will differ between full and partial withdrawals. To have a clearer understanding, full withdrawals will allow validators to completely exit the Beacon Chain in each epoch (an epoch consists of 32 blocks and occurs every 6.4 minutes). Given the number of validators currently on Ethereum, the exit rate will likely be limited to somewhere around eight validators per epoch at the time of the upgrade.
On the other hand, partial withdrawals (also known as skimming) will occur in each slot automatically starting from index 0 of Beacon Chain, which equates to approximately 147,000 validators every day.
And last but definitely not least, don’t believe the FUD many are spreading about Shapella causing the price of ETH to drop drastically. It is important to understand that the restrictions put into place by the EF for withdrawing ETH on the Beacon Chain are specifically to prevent a large supply shock that affects the Ethereum price in a catastrophically negative way.
While it is impossible to generate an accurate ethereum price prediction, there are plenty of solid reasons to think that there will be an increased interest from both retail and institutional investors to take part in Ethereum staking after the Shapella Upgrade.
Shapella could catalyze greater participation in staking among Ethereum newbies as it will reinforce staked ETH as a desirable asset, earning rewards to improve the security of the Ethereum blockchain and no longer being locked long-term in a smart contract.
Protocols focused on providing Staking as a Service (SaaS) through
non-custodial solutions via
pooled staking and Liquid Staking (LSD) protocols,
could drive a flow of new investors into the Ethereum ecosystem, and the cryptocurrency sector in general.
More about Staking and Liquid Staking: https://medium.com/ethereum-on-steroids/staking-vs-liquid-staking-on-ethereum-f207bed613da
At
SafeStake, we continue to work to expand the validator base for the new post-Shapella Ethereum through a plug-and-play solution for non-custodial Ethereum staking
using DVT technology. SafeStake is a robust and decentralized protocol that helps to
increase the security of Ethereum and maximize staking rewards, adding value to the assets at stake.
