Market Byte: A Pivotal Upgrade for Ethereum
Michael Zhao
Matt Maximo
Figure 1: ETH and BTC Price Returns
Source: Grayscale Research, as of 4/12/2023 0:00 ET to 4/14/2023 9:25 ET
Stakers and validators wishing to unstake and withdraw their assets have two options: Full and Partial withdrawals. The withdrawal cycle, however, varies based on the type of withdrawal, and therefore the time it takes to receive the assets varies.
Partial withdrawals involve withdrawing balances in excess of 32 ETH, which consist of earned rewards. These balances are sent to an Ethereum address and can be spent immediately. In this scenario, the validator continues to be a part of the network and carries on with validation. Partial withdrawals are faster than full withdrawals, as they do not need to enter the exit queue.
Full withdrawals, on the other hand, involve the validator exiting and stopping their participation in securing the network. The entire balance, including the 32 ETH principal and any rewards, is unlocked and becomes available for spending after the exit and withdrawal queues are complete.
1. Exit Queue – The minimum exit time is 5 epochs or approximately 32 minutes, however, due to network congestion, exits are likely to take longer.
Only Full Withdrawals
1.Withdrawal Queue – The withdrawal queue has a minimum buffer of 256 epochs or approximately 27 hours.
Both Full and Partial Withdrawals
Who is Withdrawing ETH?
Figure 2: Total ETH Withdrawn
Source: Nansen, as of 4/13/2023
The velocity of validator exits seems to confirm that a majority of validator flows are due to concentrated players. The number of validators awaiting exit ramped up at 6:00 PM on April 12, 2023, eventually slowing down near the 15,000 validator mark (Figure 3).
Figure 3: ETH validators awaiting exit
Potential Longer-Term Impacts on Ethereum
[1] TradingView as of 4/14/2023
[2] An Ethereum validator is a network participant who stakes a minimum of 32 ETH to help secure the Ethereum blockchain, validate transactions, and create new blocks in the Ethereum Proof-of-Stake (PoS) consensus model.
[4] Stakingrewards.com as of 4/14/2023
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