Upgrade on Ethereum Shanghai will enable withdrawal function, analyzing ETH selling pressure under different circumstances.

23-02-09 11:28
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Original Title: "Upgrade in Shanghai on Ethereum will enable withdrawal function, analyzing ETH selling pressure under different circumstances"
Original Author: korpi
Translated by: DeFi Road

After the Shanghai upgrade, a large amount of ETH will be withdrawn, with the quantity possibly ranging from 3 million to 6 million.

How many will be sold?

I have divided the pledgers into several categories to understand their ability and willingness to sell ETH, and analyzed different scenarios.

This article will tell you about possible situations:

Image: Estimated selling pressure from partial and complete extractions

The ETH withdrawal function of Shanghai's upgraded opening will be the biggest resistance to its price in the near future. This article will estimate their potential selling pressure.

Reminder: Extraction can be partial or complete.

部分(PW:Partial Withdrawal)
translates to

Partial Withdrawal (PW)
in English.

Only extract the rewarded portion.

Process active validators with balances greater than 32 ETH.

全部(FW:Full Withdrawal)
translates to

All (FW: Full Withdrawal)
in English.

All validator balances have been withdrawn.

Processing validators for the introduction of the validator set.

How much ETH will be extracted at that time?

Assuming the Shanghai upgrade happened today:

1,021,602 ETH: PW (512,000 active validator's staking rewards)

37,758 ETH: FW (balances of all 1,105 exiting validators)

Total: 1,059,360 ETH

This requires about 4.5 days to process.

However, the most likely time for Shanghai to upgrade is before the end of March.

If the current trend of activity can continue, it is expected that by the end of March there will be:

540,000 validators received an additional 97,000 ETH in staking rewards.

There is only 1,119,000 ETH space available in PW.

What about FW? Initially, there may be many FW.

Even if only 10% of validators decide to exit, it will take 31 days to complete the exit queue (8 exits/epoch).

Assuming there are 1,800 FW per day, 57,600 ETH will be unlocked every day within a month.

Image: ETH validator withdrawal waiting time, assuming a validator count of 540,000

Let's summarize:

1,119,000 ETH: PW (540,000 staking rewards for active validators)

38,000 ETH: FW, for validators who have already exited.

1,728,000 ETH: FW, if 10% of validators exit.

Translated: 1,728,000 ETH: FW, if 10% of validators exit.

Total: 2,885,000 ETH

Here is what daily withdrawals look like:

Image: The situation of PW and FW after Shanghai's upgrade, assuming a validator count of 540,000 and an exit rate of 10%

If more validators decide to exit, the withdrawal schedule for the first month will not change.

The only difference is that processing all FW will take more time.

Image: The situation of PW and FW after Shanghai's upgrade, assuming a validator count of 540,000 and an exit rate of 20%

How much ETH will be sold?

My estimated range is from 436,000 ETH to 2,917,000 ETH.

This range is very broad, representing extreme situations: moderate selling and aggressive dumping.

If you are interested in how I came up with this number, please continue reading.

First, let's talk about the types of pledgers. It is very useful to analyze the ETH in the pledge through the types of pledgers.

Among them are:

33.3% comes from liquidity mining 

28.2% from centralized trading platforms.

25.0% from unidentified individuals + whales + others 

13.5% from the collateral pool

Each type has a different way of handling PW and FW.

The above data is from @hildobby_'s Dune dashboard.

Let's start with PW


All validators please update withdrawal credentials as soon as possible - PW will handle it automatically, but only when the credentials are updated to the new format.

The category of pledger defines the ability/willingness to sell ETH (see more details below).

Liquidity Collateral: The design of liquidity collateral ETH (lsETH) has taken into account the collateral rewards. This means that PW will not be distributed to lsETH holders. They will choose liquidity collateral providers who are likely to use them to set up new validators. There is no dumping here.

Pledge Pool: From an economic perspective, there is no reason for the pledger to immediately receive their PW. Instead, it is more profitable to set up new validators. Some pledge pools may also require an "unbinding" period before the pledger can receive their rewards. I think this will help suppress selling pressure.

Centralized exchange platform: Some CEXs use IsETH, which should have a script similar to liquidity mining, meaning there is no selling pressure. Other CEXs are more like staking pools - there is no reason to immediately give stakers PW, which means selling pressure will be suppressed.

Unknown identities + whales + others: I speculate that most of this group are independent stakers. Independent stakers are likely Ethereum believers and long-term ETH holders. Some of them may choose to withdraw their earnings immediately, but I expect this group will not create significant selling pressure.


I have predicted the percentage of ETH sold under PW in three scenarios: mild, moderate, and aggressive.

Mild: 8% => 92,000 ETH

Average: 16% = > 183,000 ETH

Translated: Average: 16% = > 183,000 ETHRadical: 30% = > 333,000 ETH

It takes about 5 days to complete the sale.

Image: PW Sales Forecast

再来看 FW

translates to

Take a look at FW again

in English.


Validators should exit as soon as possible - maximum number of exits processed per day (1,800).

Every day deals with all FW (1,800).

The number of active validators remains unchanged - new validators are also being established.The category of pledger and profitability define the willingness to sell.

The challenge lies in predicting the selling pressure from FW.

There are two unknown variables:

The percentage of validators who want to exit

The percentage of validators you want to sell

In order to evaluate the average daily sales pressure, these two factors must be taken into consideration.

The reasons for quitting are three:

Sell coins.Hodl/DeFi mining

Re-enter (change pledge settings/provider, etc.)

It is difficult to predict how many validators will exit.

I will consider three situations:

Mild: 10% 

Average: 20% 

Radical: 30%

Image: FW Sales Forecast

Due to the increasing number of validators exiting for reasons other than selling, the average daily selling pressure is decreasing, despite the total selling pressure remaining constant.

For example:

10% of validators want to sell.

If 10% withdraw, then 100% of FW will be sold daily.If 20% withdraw, then 50% of the daily FW will be sold.

Figure: Daily selling pressure depends on the percentage of validators exiting. Assuming a total of 540,000 validators, 10% want to sell.

I have divided the validator set into multiple parts based on two dimensions:

Pledger CategoryThe content you provided is:

Profit Group



Categories are different. For example, compared to CEX pledgers, individual pledgers are less likely to sell.

People who make money are more likely to sell than those whose assets are shrinking.

Image: Profitability of different types of pledgers


Selling pressure from FW:

Moderate: 2% => 345,000 ETH

Average: 7% => 1,206,000 ETH

Radical: 15% = > 2,585,000 ETH

Image: FW Ejection Prediction

Total Selling Pressure

By aggregating the selling pressure from PW and FW, we obtain the total selling pressure for three scenarios:

Moderate: 436,000 ETH => 14,000 ETH/day, exceeding 1 month.

Average: 1,390,000 ETH => 23,000 ETH/day, exceeding 2 months.

Radical: 2,917,000 ETH => 32,000 ETH/day, exceeding 3 months.

图:PW and FW Pressure Drop Summary

Under mild circumstances, 14,000 ETH per day is equivalent to the new coins issued to miners before transitioning to PoS (about 13,000 ETH) and nothing may happen.

If it is an average or aggressive situation, there may be stronger selling pressure that could affect prices unless new buyers emerge.


translates to

Finally, I want to say

in English.

From a long-term perspective, I am very optimistic about ETH.

However, it is difficult for us to ignore the negative factors brought about by the withdrawal of openness.

Just the expectation of selling off can lead to selling off.

However, if the market continues to be bullish, it may be easily absorbed by new buyers.

Additionally: For simplicity, my calculations assume that the daily inflow of PW remains constant. In reality, this will result in a curve that reaches its peak in a few days. However, the total PW will not change, so the impact will not be significant. Detailed explanation of PW distribution: https://dataalways.substack.com/p/partial-withdrawals-after-the-shanghai

This article is not intended to spread FUD! I am very bullish on ETH! Most of my assets are also in ETH. Don't hate me just because I said some things that made you uncomfortable.

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