Ethereum completes major upgrade, allows users to withdraw staked ETH

Ethereum has successfully integrated its Shanghai and Capella upgrades (collectively known as the 'Shapella' upgrade), allowing users and validators to withdraw their staked ether (ETH) from the network.

The major upgrade marks the completion of the network's transition to a proof-of-stake (PoS) consensus mechanism, which began in September 2022 with 'The Merge'.

With The Merge, Ethereum's primary chain (running on Proof of Work) had merged with the Beacon Chain, bringing PoS functionality to the network.

The Beacon Chain was running since December 2020 and had accumulated stakes of 18 million ETH (worth $33 billion). However, the staked ETH could not be withdrawn until yesterday's Shapella upgrade, which has unlocked these funds.

As part of the upgrade, a hard fork was implemented with Ethereum Improvement Proposal (EIP) 4895, allowing network participants to withdraw their staked ETH.

The Shapella upgrade has introduced two types of withdrawals for staked ETH: partial and full.

Partial withdrawals will automatically distribute ETH to validators, ensuring their balance remains at the necessary 32 ETH to maintain validator status. Full withdrawals involve shutting down the validator and withdrawing the entire staked balance.

In addition, not all of the staked ETH will be available for withdrawal in order to prevent short-term price fluctuations due to the sudden rise in the liquidity of ETH.

Further, with ETH at a lower price now than when many users staked their funds, it's likely these holders wouldn't want to sell at a loss.

A CoinDesk article reported that within the first hour of the hard fork, a total of 12,859 ETH were unlocked in 4,333 withdrawals, citing data from Ethereum block explorer beaconchai.in.

The Shapella upgrade also optimised the network's gas fees for certain transactions.