MetalSwap

<blockquote>— Originally written on <a href="https://metalswap.me/sh3" rel="noopener noreferrer nofollow">MetalSwap’s Official Blog</a></blockquote><h2 id="header-0">Navigating Validator Exits and Risk Management with MetalSwap</h2>Following our previous articles on the Shanghai and Capella update, and introduced the concept of partial withdrawals on the second step, we now delve into total withdrawals. This feature gives to validators the ability to get back their entire staked ETH balance upon exiting the validator role. In this article, we will explore the Total withdrawal process, its impact on validator earnings, and how Hedging Swap services like MetalSwap can manage risks associated with market volatility.<h2 id="header-1">Understanding Total Withdrawals</h2>Total withdrawals involve the recovery of an ‘exited’ validator’s entire balance. This process occurs automatically for validators with a 0x01 withdrawal credential and has exited. The total withdrawal period comprises the validator exit process and the full withdrawal process. Hypothetically, a complete withdrawal should take a minimum of 28 hours, but most will take longer due to various factors.<img src="https://miro.medium.com/v2/resize:fit:788/0*RZ-QVHbODmYcziDL" /><h2 id="header-2">Processing Time and Steps</h2>The Total withdrawal process consists of several steps:An active validator with a 0x01 withdrawal credential proposes and certifies blocks.<ul><li>The validator’s private key signs a voluntary exit (VE), which is sent to the Ethereum Consensus Layer (CL) via a CL client.</li><li>A maximum of 16 VEs are processed per slot (every 12 seconds).</li><li>After the VE is processed and a minimum delay of five epochs (32 minutes), the validator’s status updates from active to outgoing, entering the exit queue.</li><li>After processing through the exit queue, the validator’s status updates from exiting to exited, ceasing block validation.</li></ul><img src="https://miro.medium.com/v2/resize:fit:788/0*5hIs_JQZkb1W3d-W" /><ul><li>A minimum delay of 256 epochs (27.3 hours) occurs before the validator’s status updates from exited to withdrawable.</li></ul><img src="https://miro.medium.com/v2/resize:fit:788/0*AkBnWIXG23otF6RC" /><ul><li>Finally, the withdrawable validator undergoes the same automated ‘scan’ that processes partial withdrawals, and its balance is withdrawn.</li></ul><h2 id="header-3">Managing Risk with MetalSwap</h2>Facing uncertainties surrounding market reactions to total withdrawals, validators can manage risk using MetalSwap. Consider a validator who staked 32 ETH and decides to exit. Assuming no slashing penalties for bad behavior, the validator will withdraw around 34 ETH. The total exit process requires more time and steps: changing the node key from BLS 0x00 to Execution Layer 0x01 (2–5 days), managing the exit queue (51 days in our example), and waiting for the balance withdrawal (7 days).To protect against market volatility, the validator opts to hedge their position using MetalSwap. They choose coverage for the entire exit process, targeting a size of 34 ETH and a Cover of 15% of their choosing.<img src="https://miro.medium.com/v2/resize:fit:788/0*TTH7FRhxUOHpnVM1" />MetalSwap’s dApp Dashboard<ul><li>If the ETH price increases, the validator benefits from the asset’s appreciation at the expense of a Premium paid to Open the Hedging position and its cover (of 15%, hence 5,1 ETH) proportional erosion, with the possibility of resettling the swap position adding more Cover, instead of running the risk of the threshold being reached.</li><li>In the ETH price strikes the threshold, the Open Swap goes liquidated.</li><li>If the price of ETH decreases, MetalSwap covers the price gap on the whole 34 ETH Target Size.</li></ul>For those curious about use cases, we have provided an embedded Google Sheet sandbox, where you can explore and experiment with different scenarios and parameters:<blockquote><a href="https://onedrive.live.com/View.aspx?resid&#61;D57EF1CC3B5D56EA!328&amp;authkey&#61;!ANRfngoPhSZPKSk" rel="noopener noreferrer nofollow">Hedging Swap Calculator</a> DISCLAIMER : This file is not official and was created by a community member to give a rough projection on the use of the Hedging Swap tool found on the site <a href="https://app.metalswap.finance/" rel="noopener noreferrer nofollow">MetalSwap Dapp</a>. It is therefore advisable to check and possibly report any errors in the official Metalswap chats to ensure that it can be improved by the community</blockquote>Assuming the final price of ETH at the end of the 51 days will be 1650 USD, we may summarize this use case in the following way:<img src="https://miro.medium.com/v2/resize:fit:521/0*ZNPIyGMTZ0vQnOau.png" />Calculator projection<h2 id="header-4">Conclusion</h2>Total withdrawals post-Shanghai Update provide validators with flexibility and control over their assets. However, potential market volatility necessitates a strategic approach to risk management. Decentralized hedging swap instruments like MetalSwap offer an effective solution for navigating uncertainties, enabling validators to protect their digital assets and make informed decisions in the face of market fluctuations.Incorporating tools like MetalSwap’s Hedging Swaps into decision-making processes allows Ethereum validators to adapt to upcoming changes, manage challenges posed by increased market volatility, and safeguard their investments during the total withdrawal process. By referencing the insights from our previous articles Shanghai Overview and Partial Withdrawal, validators can be better prepared for the evolving Ethereum ecosystem.Goodbye Volatility! To the MetalSwap… and beyond!-The DeFi Foundation<h2 id="header-5">✎ What is MetalSwap?</h2>MetalSwap is a decentralized platform that allows hedging swaps on financial markets with the aim of providing a coverage to those who work with commodities and an investment opportunity for those who contribute to increase the shared liquidity of the project. Allowing the protection for an increasing number of operators.With MetalSwap we enable hedge swap transactions through the use of Smart Contracts, AMM style.<h2 id="header-6">⚠️Warning⚠️</h2>❗ METALSWAP ‘s admins or moderators will NEVER contact you directly on any social under any kind of circumstances.❗ Everything concerning $XMT ‘s smart contracts and addresses is shared by our official channels (list below), do not trust any different info from any different source.<h2 id="header-7">Goerli Demo Infobox</h2>https://demo.metalswap.finance/USDT Demo:0xD885375bF67fAB66e7d422a1Dad71f39527A818EWBTC Demo:0xf4027D47753cF54aB51315d1d0cBDF7183d7f8F0XMT Demo:0x5e789DB07183A902571bD7738D2D0E50297697C8WPAXG Demo:0xD1a700e84334992d698CBaD0Cc38e85934eF706CPAXG Demo:0x38deeE79b80e08f51B98f2228Ff8Cd7040d48458Get Goerli tokens from MetalSwap’s faucet!<h2 id="header-8">Links</h2>OFFCIAL WEBSITE &#x1f449;&#x1f3fb; https://www.metalswap.finance/YOUTUBE &#x1f449;&#x1f3fb; https://www.youtube.com/channel/UCuFVZOpAOzuzlmJbPA4wdkwMEDIUM &#x1f449;&#x1f3fb; https://medium.com/metalswapTWITTER &#x1f449;&#x1f3fb; https://twitter.com/MetalSwapNetDISCORD &#x1f449;&#x1f3fb; https://discord.com/invite/eYay7NV6vFTELEGRAM &#x1f449;&#x1f3fb; https://t.me/metalswap

METALSWAP DEFI USE CASE: VOLATILITY IN SHANGAI- TOTAL WITHDRAW

Table of Contents

MetalSwap

Other articles published on Apr 10, 2023

More Than Half of All Circulating Bitcoin Is Dormant

‘Right time’ for Hong Kong’s Web3 Push Despite Market Flux — Financial Secretary

Get Your Taxes Right: The Best Crypto Tax Software In Canada 2024

💰💲200.000 Trading Competition

S. Korean Crypto Exchange Loses 23% of its Assets in a $13M Hack

5 Best New Cryptocurrencies To Buy in April 2023

Join our free newsletter for daily crypto updates!