On 12 April, the Ethereum blockchain will activate the Shapella hardfork. The update will allow ETH to be withdrawn from stacking.

Today, Ethereum, the world's second-largest cryptocurrency by market capitalization, will finish its massive transformation.

Now, users can withdraw funds from staking, which means around 18 million ETH, accounting for approximately 15% of the total coin circulation.

This marks the final stage of Ethereum's major update "The Merge," which transitions the network from Proof-of-Work (PoW) to the Proof-of-Stake (PoS) transaction confirmation algorithm. Under the algorithm's rules, new ETH is distributed as a reward to those who hold coins in staking. The more ETH a blockchain validator has in staking, the higher the probability that the Ethereum network will select them to process transactions and reward them with new coins.

Last September, developers successfully transitioned the network to the PoS algorithm, but investors with coins locked in the Beacon Chain technically could not withdraw their funds or accrued rewards.

Shapella solves this problem. After the update, around 500,000 validators will be able to withdraw a minimum stake of 32 ETH (about $57,000) and the accumulated rewards in the form of new coins. By the time of the update's activation, investors had collectively earned around 1 million ETH or approximately 0.9% of Ethereum's market capitalization.

 

What about the crypto market and load on exchanges? 

Coinbase has announced that it will begin processing withdrawal requests 24 hours after the finish of the update. The exchange also stated that due to high demand, it may take weeks or even months to process all ETH unlock requests. Lido administrators plan to delay withdrawal capabilities until mid-May to complete code audits and ensure a smooth process.

Technical limitations in the network also constrain mass fund withdrawals. The network can process only 16 requests for partial withdrawal of staking rewards every 12 seconds. Complete withdrawals, including the stake, when a validator leaves the Ethereum blockchain, may also take much time. Therefore, after the activation of Shapella, the queue for withdrawals may become quite long.

Transfers may also be delayed due to the network load for at least the next few days. Consider it if you will be transferring ETH from your PassimPay accounts to someone else.