Key Takeaways
- Under worst-case scenarios, ETH selling pressure could equal 3.4% of daily trading volume for 5 days.
- Validators have two withdrawal methods: Full Withdrawal (FW) and Partial Withdrawal (PW).
- The exit queue mechanism ensures economic security, with FW potentially taking ~534 days to complete.
Two ETH Withdrawal Methods
Full Withdrawal (FW)
- Removes a validator's entire 32 ETH stake from the pool.
Partial Withdrawal (PW)
- Transfers excess ETH (>32) accumulated as staking rewards to a withdrawal address.
Exit Queue Dynamics
The exit queue limits daily validator exits to maintain network stability:
- Current Active Validators: ~563,000
- Daily ETH Exit Cap: 57,600 ETH (~$110M at $1,920/ETH)
- Percentage of Daily Trading Volume: 0.85% (easily absorbed by markets).
Scaling the Queue
- 4 validators/epoch: Requires <327,680 active validators (~1,125 exits/day).
- 8 validators/epoch: Needs 524,288 validators (~1,800 exits/day).
Post-Exit Process:
- Standard Wait Period: 256 epochs (~27 hours).
- Slashed Validators: 8,192 epochs (~36 days).
👉 Explore Ethereum staking trends
Selling Pressure Analysis
Partial Withdrawals (PW)
- Total Excess ETH: ~1.125M ETH (2 ETH/validator).
- Processing Rate: 115,200 validators/day → 5 days to complete PW.
- Max Daily Selling Pressure: 230K ETH ($441M), or 3.4% of daily trading volume.
Full Withdrawals (FW)
- Timeframe: ~534 days for all validators to exit.
FAQs
Q1: How does the exit queue protect Ethereum?
A: It limits mass exits, ensuring stable ETH supply and price.
Q2: When can Lido Finance users withdraw ETH?
A: By early May, post-V2 upgrade security audits.
Q3: Will staking ratios rise post-Shanghai?
A: Debated. Higher ratios could align with PoS chains but risk over-inflation if APR isn’t managed.
Final Notes
- Market Impact: Even worst-case selling is minor (~3.4% daily volume).
- Strategic Takeaway: PW-driven sell pressure is short-lived; FW exits span over a year.