The recent Shanghai upgrade of Ethereum has caused a backlog in requests to unstake ether (ETH) from the blockchain. The upgrade, also known as Shapella, introduced a series of blockchain code changes that allowed for staked ETH withdrawals for the first time. This resulted in an influx of validator requests for redemptions, with around 17,000 requests for full withdrawals and 285,000 for partial withdrawals. However, there is some disagreement about these numbers, with blockchain analysis firm Nansen estimating the number of full withdrawals at around 22,000, while an Ethereum Foundation-sponsored data dashboard on the website Metrika puts the number at around 17,000.
The total number of validators is approximately 567,000, according to Nansen, with the ones waiting for full withdrawals representing just 4%. A full withdrawal occurs when validators request their entire original deposit of 32 ETH, which is worth around $64,000 and is required to participate in the proof-of-stake network. Despite the influx of requests, the Ethereum blockchain appears to be processing withdrawals at just 55.4% of its capacity, resulting in a backlog of approximately two weeks. This is longer than several blockchain analysts’ estimates prior to the Shanghai upgrade, which suggested that it could take a few hours to a few days to get through the backlog.
Approximately 1,000 validators have fully exited the Beacon Chain, with analysts noting that validators associated with Kraken, the crypto exchange, make up around 80% of the queue. This was expected, as Kraken agreed in February to shut down its staking service in a settlement with the Securities and Exchange Commission. The Rated Network explorer shows that Kraken makes up the majority of validators looking to exit the Beacon Chain.
While stakers are starting to withdraw their accrued rewards, ether (ETH) deposited into the Beacon Chain has started to grow, indicating that stakers want to participate in Ethereum’s maintenance of the blockchain going forward. However, withdrawals still outweigh the deposits on a net basis, with the 24-hour net deposit change into the Beacon Chain currently standing at minus 79,488 ETH (minus 0.4%) at the time of publication.
Data about the Shanghai Upgrade will continue to roll in as more liquid staking providers allow their users to withdraw their staked ETH. Coinbase, a cryptocurrency exchange that holds around 12.6% of all staked ETH, will allow its users to decide if they want to unstake later on Thursday. Ethereum developers met to debrief on Shanghai, with Tim Beiko, the protocol support lead at the Ethereum Foundation, expressing satisfaction with the outcome.
ETH is up around 5% over the last 24 hours and rose to $2,003 earlier today, reaching the highest point since August. Despite the backlog caused by the Shanghai upgrade, the overall outlook for Ethereum remains positive.