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Which ETH Staking Providers Will Be Ready for Withdrawals on Day 1?

source-logo  blockworks.co 23 March 2023 16:50, UTC

The long-awaited Ethereum Shanghai-Capella upgrade is right around the corner, and it will enable validators to withdraw their staked ether from the network.

To participate in staking and earn rewards on Ethereum, individual validators must lock in 32 ETH (about $52,500) into the staking contract.

Activating withdrawals will enable these Ethereum stakers to claim rewards for participating in securing the network, and eventually to completely reclaim their locked-up ether, if they so choose.

But what about those who don’t run their own validator nodes and instead rely on one of a plethora of staking services or liquid staking tokens?

As April 12 draws near, these staking service providers must plan how to enable withdrawals as well.

“If you are part of a staking pool or hold liquid staking derivatives, you should check with your provider for more details about how staking withdrawals will affect your arrangement, as each service operates differently,” the Ethereum Foundation said in a blog post.

Following the upgrade, users will have the option to redeem their underlying staked ether or switch staking providers.

“If a particular pool is getting too large, funds can be exited and redeemed, and re-staked with a smaller provider. Or, if you’ve accumulated enough ETH you could stake from home,” the blog post said.

Lido — one of the largest liquid staking service providers, with a market capitalization of a little over $10 billion — won’t allow its users who hold stETH to redeem ETH initially. The Lido DAO noted on Twitter that a needed upgrade is expected by mid-May, citing security checks.

Calling the delay “a safety margin,” the group tweeted that “stETH withdrawals won’t launch on mainnet until all audits concerning on-chain code are completed.”

In the case of Coinbase, a centralized exchange that also provides staking services, withdrawal requests will be available 24 hours following the upgrade, the company said in a tweet.

“All unstaking requests are processed on-chain, and we’ll pass the unstaked funds and staking rewards to you once released by the Ethereum protocol,” Coinbase tweeted.

The exchange is currently under scrutiny from the SEC after receiving a Wells notice over alleged security concerns.

Rocketpool, another decentralized Ethereum staking protocol, noted in a blog post earlier this month that staking withdrawals will likely be possible in time for Shanghai-Capella, following an upgrade dubbed Atlas, though specific dates have not yet been confirmed.

“We are targeting a mainnet Atlas release for end of March / early April,” RocketPool founder David Rugendyke said.

Stakewise has not provided clear documentation outlining dates of withdrawals but is estimated to be available following its “Phase 2” plans.

“Upon arrival of Phase 2, StakeWise users will be able to burn sETH2 and rETH2 within the app and receive ETH in return at a 1:1 ratio,” the company said in a blog post.

Similar to Stakewise, Frax has not detailed specific withdrawal dates. A representative for Frax was not immediately available for comment.