The highly anticipated Shanghai/Capella hard fork, implemented on April 12, 2023, marked a pivotal moment in Ethereum’s evolution. For the first time since the Beacon Chain launched in December 2020, stakers gained the ability to withdraw their staked ETH and accumulated rewards. With approximately 18 million ETH (about 15% of the total circulating supply) suddenly becoming unlockable, market participants widely speculated about potential sell pressure and price volatility.
This analysis dives deep into Ethereum’s staking ecosystem to assess who is most likely to withdraw, how much ETH might enter circulation, and what real-world impact these outflows could have. By segmenting stakers based on behavior, profitability, size, and timing, we provide a data-driven framework to separate fear from fact.
Understanding Ethereum’s Proof-of-Stake Structure
To accurately model post-Shanghai dynamics, it's essential to understand the key actors in Ethereum’s consensus layer:
- Depositors are individuals or entities that send 32 ETH to the deposit contract to activate a validator. A single depositor can control multiple validators.
- Validators are virtual entities on the Beacon Chain responsible for proposing and attesting to blocks. They earn staking rewards from both consensus-layer issuance and execution-layer transaction tips.
- Nodes are the physical infrastructure running validator software. These can be self-operated or delegated to third-party services.
While much research focuses on validators as primary economic agents, decisions are ultimately made at the depositor level—real people or organizations deciding whether to withdraw, reinvest, or sell.
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Classifying Stakers: A Behavioral Framework
We segment depositors using four core dimensions:
- Age: How long they’ve been active since initial deposit.
- Size: Number of validators controlled (from solo stakers to whales).
- Profitability: Unrealized profit/loss based on entry price vs current ETH value.
- Type: Individual (self-staking) vs institutional providers (e.g., Lido, Coinbase).
This classification helps predict withdrawal motivations and potential market impact.
Individual vs Institutional Stakers
Analyzing deposit patterns reveals two distinct groups:
- One-time depositors (blue) tend to act around major network events—Beacon Chain genesis, The Merge, and anticipation of Shanghai.
- Frequent depositors (red), representing more sophisticated participants, dominate ongoing activity.
Notably, recurring staking activity remained subdued during the 2021 bull run but surged after The Merge, reflecting growing confidence in Ethereum’s long-term vision.
The Rise of Staking Providers
Staking providers enable users to participate without running nodes or committing 32 ETH. Key players include:
- Lido, controlling over 30% of all staked ETH via its liquid staking derivative (stETH).
- Coinbase, Kraken, and Binance, with 11.5%, 7.0%, and 5.4% market share respectively.
However, regulatory scrutiny has impacted centralized providers. Kraken exited U.S. staking services in February 2023 after an SEC fine, while Coinbase received a Wells Notice in March—slowing institutional momentum.
Depositor Age and Commitment Levels
We categorize depositors by when they first participated:
- A surprising 25,000 depositors began before the Beacon Chain officially launched—indicating strong ideological commitment.
- Most others joined within six to twelve months prior to Shanghai, suggesting increased trust post-Merge.
Early adopters likely view staking not just as an investment but as a form of network stewardship. Their low exit likelihood supports network stability.
Depositor Size Distribution
After excluding providers, we observe a bimodal distribution:
- Small stakers ("shrimps"): Hold one validator (32 ETH).
- Large stakers ("whales"): Operate over 500 validators (16,000+ ETH).
Notably, mid-sized operators ("crabs" and "fish") make up only 13.5% of depositors—highlighting centralization trends.
Whales dominate unrealized losses (76% of $4.7B total), yet their financial resilience reduces immediate sell motivation.
Profitability and Unrealized Gains/Losses
The average entry price for all staked ETH is **$2,136**, resulting in a **-13% unrealized loss** at current prices (~$1,870). In contrast, Ethereum’s overall realized price is $1,403—meaning the broader holder base is up +36%.
Key insights by provider:
- Lido and Coinbase depositors face ~50% higher cost bases than current prices.
- Binance and Kraken entered closer to breakeven (~$1,812–$1,900).
High-cost depositors may be more inclined to exit—but liquid staking derivatives like stETH allow hedging without withdrawal.
Approximately half of all staked ETH is underwater, influencing behavioral incentives post-unlock.
Simulating Partial Withdrawals: Claiming Accumulated Rewards
Post-Shanghai, two withdrawal types became possible:
- Partial withdrawals ("skimming"): Automatically extract excess balance above 32 ETH per validator (i.e., rewards).
- Full withdrawals: Exit entirely and reclaim principal.
Currently, ~1.137 million ETH (~$2.1B) sits as unclaimed rewards across validators.
Only validators with updated 0x01 withdrawal credentials qualify for automatic processing. Presently, only 44% meet this requirement.
Crucially:
- Validators with older 0x00 credentials hold nearly 75% of accumulated rewards.
- These must manually upgrade credentials post-upgrade before claiming.
Estimated Reward Unlock Scenarios
| Scenario | ETH Released | Timeframe |
|---|---|---|
| Conservative (50% credential update) | ~706,000 ETH ($1.31B) | Over several days |
| Maximum (all update immediately) | 1.137M ETH ($2.1B) | Within 4.5 days |
We estimate 70.6K–162K ETH ($141M–$303M) could be sold immediately—driven largely by smaller or financially constrained actors.
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Simulating Full Withdrawals: Exiting the Staking Pool
Daily withdrawal capacity is limited by Ethereum’s churn limit:
Churn Limit = Active Validators / 65,536
→ Currently allows ~1,800 validators per day (~57,600 ETH).
Additional delays apply:
- Voluntary exits: 27-hour waiting period.
- Slashed validators: ~36-day delay.
As of pre-Shanghai data:
- 1,229 validators queued for voluntary exit.
- 214 slashed validators pending release.
- Total: ~45,098 ETH ($83.3M) immediately eligible for withdrawal.
Only 253 unique depositors are involved—mostly solo stakers from early bull market phases.
While Coinbase plans immediate withdrawals, Lido delays until May; Kraken and Binance have not announced timelines.
Even under extreme demand, no more than 57,600 ETH/day becomes liquid—less than daily issuance (~13,500 ETH/day).
Total Supply Impact: Three Realistic Scenarios
| Scenario | Description | Total ETH Sold | Market Context |
|---|---|---|---|
| Extreme | All rewards + max daily exits sold | 1.54M ETH ($2.93B) | Doubles weekly exchange inflows |
| Baseline | Only 0x01 credential holders claim; moderate exits | 312K ETH ($592M) | Within normal volatility range |
| Most Likely | 50% credential updates; reinvestment trends; doubled exit queue | 170K ETH ($323M) | Comparable to minor market events |
Even the worst-case scenario falls within typical weekly exchange inflows—far below shocks like the FTX collapse.
Frequently Asked Questions (FAQ)
Q: Will the Shanghai upgrade cause a massive price drop due to selling?
A: Unlikely. Withdrawal mechanics are rate-limited (~57.6K ETH/day), and most large stakers show strong conviction. Historical exchange inflows suggest even worst-case outflows are manageable.
Q: Who is most likely to sell their withdrawn ETH?
A: Smaller stakers with urgent liquidity needs or those operating outdated setups may sell. However, whales and institutions are more likely to reinvest or hold.
Q: Can all staked ETH be withdrawn immediately?
A: No. Only excess rewards above 32 ETH per validator can be skimmed instantly—if credentials are updated. Full principal withdrawals are capped at ~57,600 ETH per day.
Q: Are staking providers selling their holdings?
A: Most are not. Lido plans delayed withdrawals; Coinbase allows them but likely won’t dump. Regulatory pressure has slowed centralized exits.
Q: How does profitability affect withdrawal decisions?
A: Many stakers are underwater (~50% of supply), reducing incentive to sell at a loss. High-cost entrants may prefer holding for recovery or using derivatives for liquidity.
Q: Is the network secure if many validators exit?
A: Yes. The churn limit ensures gradual exits over weeks or months—even under peak demand—preserving consensus stability.
Final Outlook: Minimal Market Impact Expected
Despite widespread fears, our analysis concludes that post-Shanghai sell pressure will be modest and well-contained:
- Estimated sell volume: ~170,000 ETH ($323M) in the base case.
- Systemic limits prevent sudden dumps.
- Strong holder conviction, especially among early adopters and whales.
- Reinvestment into liquid staking products likely absorbs much of the unlocked supply.
The real story isn’t risk—it’s maturation. Shanghai unlocks new utility for staked assets, empowering DeFi innovation and long-term participation.
Ethereum’s design shines under pressure: predictable, resilient, and aligned with decentralized principles.
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