Changes in Staking ETH withdrawal data after Shanghai upgrade.

23-04-24 18:43

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Source: Ebunker Chinese Blog

ETH is experiencing a second wave of withdrawals

After more than a week since the Shanghai upgrade, statistics show that the number of ETH deposits exceeded withdrawals on April 18th, after the first wave of withdrawals following the upgrade. However, a new wave of withdrawals soon followed. As of April 20th, 2023, there are a total of 758,842 ETH waiting for withdrawal, accounting for 4.08% of the ETH still in a locked state.

Since the upgrade in Shanghai, market participants have been closely monitoring the withdrawal data of ETH, as there has been much debate about whether there will be a huge selling pressure in the market. However, as of April 20th, the selling pressure of ETH has not been released all at once after the upgrade, but has shown phased characteristics.

During last week, the number of withdrawals continued to rise, and currently, there are still 758,000 ETH queued for withdrawal. According to statistics from Nansen.AI, since April 18th, the number of ETH deposits has surpassed the number of withdrawals, and most of the recent ETH has been deposited through liquidity staking protocols such as Lido, Rocketpool, and Frax. However, starting on the 19th, another wave of withdrawals occurred, possibly due to Binance opening its withdrawal service and the downturn in the overall market.

Withdrawal Waiting Time

Shanghai has upgraded Ethereum to allow stakers to withdraw all their balances from validators. When a full validator withdraws all 32 ETH, the validator is deactivated, while partial withdrawals allow stakers to simply withdraw rewards earned beyond the 32 ETH. When all 32 ETH are withdrawn from a validator, it results in the validator's exit. Therefore, the Ethereum team has set strict time limits to ensure that multiple validators do not exit completely in a short period of time, avoiding a threat to the security of the Ethereum network.

To extract the pledged ETH, validators need to change their withdrawal credentials prefix from 0x00 to 0x01. At the time of the Shanghai upgrade, only about 40% of validators had set their credentials to 0x01. Currently, this number has increased to 85.8%, and it is expected to gradually approach 100% in the future.

The entire withdrawal process is as follows: The validator first sends a voluntary withdrawal message and needs to wait for 25 minutes. Then, these validators who send the message join the withdrawal queue and need to wait for about 11.7 days. After this stage is over, they will face a withdrawal delay of about 27 hours. Finally, after an additional wait of 4.25 days, the entire withdrawal can be completed. In other words, if a validator decides to withdraw the staked ETH now, they will need to wait at least 17 days.

Part of the withdrawal means that the validator only withdraws the rewards obtained from the pledge, while keeping the ETH principal to continue running the validator. Therefore, the waiting time for partial withdrawal is relatively short, only about 4.27 days. When the withdrawal certificate is set up, the partial withdrawal will be automatically sent to the validator's address.

LSD's position in the DeFi sector is rising

Since the upgrade in Shanghai, the market share of cryptocurrency service providers has begun to shift, with DeFi being the main beneficiary. In particular, there is a high demand for liquidity staking protocols (LSPs) such as Lido, Rocket Pool, and Frax, as these LSPs allow users to participate in a range of DeFi trading and lending applications using their Ethereum-based derivatives products.

On April 15th, a total of 8,030,870 ETH were locked in LSD. By April 20th, this number had increased to 8,185,856 ETH, worth $16 billion. In the LSD protocol, the TVL in Lido is $11.84 billion, an increase of 2.21% in the past seven days.

Among the 8.185 million ETH staked in the LSD protocol, Lido's staking amount is 6,071,312 ETH, accounting for 74.17% of the LSD market share; Rocket Pool's staking amount increased by 6.69%, and Frax Protocol's data increased by 14.37%; ether.fi's staking amount increased by 20.66%.

From the TVL rankings of various categories of DeFi protocols, it can be seen that the TVL on 802 DEX protocols is 18.62 billion US dollars, ranking first, while the TVL on 82 LSD protocols is 17.99 billion US dollars, which is very close to the TVL on DEX.

CEX has a high ETH withdrawal volume

On the other hand, CEX platforms have seen a trend of ETH withdrawals and outflows. Looking at the distribution of the amount of ETH already withdrawn, Kraken, which was previously fined by the SEC for non-compliant staking services, has withdrawn 417,000 ETH, accounting for 31.5%. Binance has withdrawn 91,000 ETH, accounting for 6.72%. Huobi has withdrawn about 51,000 ETH, accounting for 3.77%.

From the ETH withdrawal distribution chart, it can be seen that Binance is waiting for about 192,000 ETH withdrawals, accounting for 25.2%. Kraken still has a large amount of ETH waiting for withdrawal, with about 181,000 ETH, accounting for 23.8%. Coinbase is waiting for about 138,000 ETH withdrawals, accounting for 18.1%, and the platform's ETH sell orders during the same period were nearly $28 million higher than buy orders.

According to Lookonchain, a blockchain analysis website, as of April 17th, among the top 20 addresses with the highest amount of ETH deposits in Shanghai after the upgrade, 13 addresses re-staked their funds after withdrawal, with a total of 34,198 ETH staked. In addition, two large holders re-staked 50,000 ETH withdrawn through the LSD protocol Agility, indicating that not all ETH withdrawals necessarily mean selling, but may also involve adjusting their staking methods.

后续抛压来源和因素

Subsequent selling pressure sources and factors

According to the Token.unlocks data, as of April 20th, the APR for ETH staking is 4.62%, which is slightly lower than before (which may also slightly decrease the attractiveness to stakers).

According to the price distribution chart when staking ETH, the highest proportion of the price range for participation is 1501-2000 US dollars, followed by 2501-3000 US dollars and 1001-1500 US dollars.

Santiment's data shows that the MVRV ratio of ETH stakers has significantly increased, which means that many addresses withdrawing ETH are profitable. If the price of ETH continues to rise, these addresses may have greater selling motivation.

In terms of online activities, ETH has not performed well recently. In the past month, due to decreased interest in Ethereum NFTs, overall usage on the Ethereum network has also declined.

Summary

In summary, ETH has passed through the Shanghai upgrade relatively smoothly, but in the short term, it still needs to continue to withstand the test of periodic selling pressure and will also be affected by the overall market trend. The withdrawal and staking process after the upgrade is also a dynamic game, so the price of ETH may still experience fluctuations. However, from a medium to long-term perspective, due to the flexibility brought by the upgrade (withdrawal waiting time is less than 20 days), after the end of the periodic withdrawal selling pressure, the waiting time for queuing for withdrawal will decrease, and the participation rate of staking is expected to continue to rise.