Actually, ETH withdrawal from the smart contract has several conditions. First of all, only 43,200 ETH of the current 18.01 million ETH in stacking can be unlocked in a day, as stated by analysts at the Glassnode platform in their latest report. Also important are market conditions, i.e. the value of the coins at which they were initially allocated to the smart contract. Let’s take a closer look at potential developments after the update.

What will happen to staking in Etherium

According to Cointelegraph’s sources, of the aforementioned total number of coins in the smart contract, only about 170,000 ETH will be sold through the market in the near future. Even if coin owners withdraw their coins at the maximum allowed limit of 43,200 ETH per day, this figure is in line with the average influx of Etherium on exchanges and will not critically affect the price of the cryptocurrency.

As a reminder, the deposit smart contract began replenishing back in December 2020 with the launch of a separate PoS chain called Beacon Chain, that is almost two years before Etherium's move to Proof-of-Stake.

It is also worth clarifying the definition of the key players in this process.

• Depositors are investors who send ethers to a smart contract to receive a validator role. It takes 32 ETH to run a validator client;
• Validators – virtual entities engaged in blockchain mining and transaction validation within PoS. That is, one depositor can have many validators;
• Nodes – the physical hardware that powers the validator software. There can also be many validators on a single node. At the same time, depositors may manage the nodes themselves or delegate them to a third party.

Based on these definitions, Glassnode experts consider depositors to be the most important factor in determining the impact of Shanghai. Depositors were also classified according to their age – that is, the time of depositing coins in a smart contract, the size or number of validators under management, the share of validators in profits and the type, whether they are individual depositors or organisations.

The distribution of depositors by age in months indicates that most of them deposited ETH in the stack 7-14 months ago, i.e. from February to September 2022.

During this period, the value of Etherium predominantly fell from $3,000 to $1,400.

The graph below also shows the activity of one-time and recurring depositors. The former have deposited coins in the stack once, while the latter have deposited coins at least several times.

Another component of the statistics is the distribution of smart contract activity amongst staking providers. These are the platforms that have deposited their clients’ ETH into staking. Typically, their services are used by those who still want to make money from the process, but don’t have 32 ETH to run at least one validator.

From this graph, analysts have drawn the following conclusions:

• A closer look at the number of deposits from a steking provider over time shows a clear change in dominance;
• In the first six months after the launch of Beacon Chain, Kraken and Binance were the dominant deposit providers among the organisations. However, over time they were overtaken by Coinbase and Lido.
• Lido’s dominance increased significantly in the second half of 2021, but the stETH token suffered a fall during the Terra collapse, as well as the bankruptcies of Three Arrows Capital and Celsius. These organisations had significant exposure or position in the token at the time.

Finally, one of the most interesting parts of the statistics is the potential losses and gains for those looking to sell coins immediately after Shanghai. Experts estimate that the average price of all ETH converted to staking is $2,136, which is lower than today’s crypto-asset rate.

Judging by the chart below, only 49.1 percent of ETH from the stacking can be sold to the upside immediately after the activation of the update. Half of the unlocked coins are unlikely to be sold – it’s just not profitable to do so right now.

That said, the total amount of unrealised losses among depositors is about $4.7 billion at the moment.

Depositors cannot withdraw ETH from staking quickly, but they can still sign a voluntary withdrawal message to let the network know they want to. There are currently 1,229 validators or 253 depositors waiting to withdraw. There are another 214 validators who will be “forced out” once withdrawals are allowed. The latter are unscrupulous participants in the process who have breached the terms of staking.

Two types of withdrawals are allowed under Shanghai: partial withdrawals and full withdrawals. Partial withdrawals, or so-called skimming, automatically remove each validator's total steering fee, reducing their balance to a minimum of 32 ETH. A full withdrawal involves completely disabling the validator and receiving the depositor's entire balance.

Of the aforementioned 253 depositors who share 1,229 validators, only 22 per cent are able to sell Etherium right now in the black.

Even in the most extreme case where Etherium will be withdrawn to the max, the volume of ETH withdrawn will still be below the average of normal ether inflows to exchanges. This means that one should not expect the cryptocurrency to collapse solely due to the ability to withdraw coins from stacking.

Based on the above statistics, analysts have come to a certain conclusion. Here’s their quote.

Even in the most extreme case of a validator outflow, the queuing system will limit the amount of supply that can be “thrown” into the market at a time. The economic impact of Shanghai would therefore be stretched out over several days or weeks. Based on our analysis, the impact on the economic model of Etherium will be far less negative than many imagine.

In other words, there is no need to panic for nothing. Immediately after Shanghai, the price of Etherium is highly unlikely to fall quickly, as most of the validators simply do not benefit from selling ETH now. Most likely, the introduction of the withdrawal feature will only motivate Ethereum holders to join the stakeout, as they will now know they can get their hands on their own coins at any time.

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