(Kitco News) - Ever since the Ethereum (ETH) network announced its intention to transition to proof of stake and launched the “Beacon Chain,” many Ether holders have elected to stake their tokens on the network to earn rewards despite not knowing when they would be able to unlock those tokens and the rewards that were generated.
That changed over the past week after the developers behind the top smart contract protocol decided during the 99th Consensus Layer (CL) call held on Dec. 1 that they intended to roll out Ethereum staking withdrawals with the upcoming Shanghai hard fork.
Ethereum lead developer Tim Beiko previously noted in the transcript of a developer’s call that “teams felt like a March fork with withdrawals should be possible,” which provided the first insight into when the Shanghai hard fork would be implemented.
On Thursday, CoinDesk confirmed that the developers have determined that the Shanghai update will take place in March 2023.
The specific proposal being implemented in the Shanghai upgrade that will enable stacked Ether withdrawals from the Beacon Chain is EIP 4895.
Also included in the Shanghai upgrade is the implementation of the "EVM Object Format" (EOF). EOF, which includes EIP 3540, EIP 3670, EIP 4200, EIP 4570, and EIP 5450, is designed to upgrade the Ethereum Virtual Machine (EVM), which powers Ethereum smart contracts. There is a possibility that the EOF may be to complicated to include with Shanghai, meaning it could also be pushed to the next upgrade to ensure that stacked Ethereum withdrawals are implemented.
Developers were able to move up the timeline for staking withdrawals by removing Ethereum Improvement Proposal (EIP) 4844 from the Shanghai upgrade. EIP 4844 dealt with a scaling upgrade known as proto-danksharding and has been pushed to the next upgrade, which is expected to happen in the fall of 2023.
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| Ethereum is now officially proof-of-stake following the successful Merge |
Splitting the current EIPs between the two upgrades gives developers more time to dedicate the needed attention to each proposal while also ensuring the launch of staking withdrawals, helping to alleviate the stress for some who have had their tokens locked on the Beach Chain staking contract since it first launched on Dec. 1, 2020.
Several platforms have launched a tokenized representation of staked Ether, such as Lido Finance’s stETH, which has caused problems and undue stress for Ethereum investors amid the volatility of 2022. During the Terra-inspired liquidity crunch earlier in the year, stETH lost its 1-to1 peg with ETH, leading some to speculate that it could lead to declines in the price of Ether. At the time of writing, stETH is trading at a price of $1,245 while Ether is trading at $1,284, a price discrepancy of 3%.
Following the widespread dissemination of the CoinDesk article announcing the ability to withdraw staked Ether in March following the Shanghai update, both ETH and stETH saw their prices sike roughly 4%.
