The Ethereum Shanghai upgrade, completed in April 2025, marked a pivotal moment in the network’s evolution—unlocking the ability for stakers to withdraw their ETH for the first time since the Merge. Over a week post-upgrade, withdrawal patterns have revealed nuanced market behavior, shifting dynamics between centralized and decentralized platforms, and evolving investor strategies.
This article analyzes key data trends following the upgrade, explores withdrawal timelines, examines the growing influence of Liquid Staking Derivatives (LSDs), and assesses potential future selling pressure—all while identifying opportunities in this new era of flexible staking.
A Two-Wave Withdrawal Pattern Emerges
Following the Shanghai upgrade, Ethereum experienced an initial surge in withdrawals, followed by a brief reversal where deposits temporarily exceeded withdrawals on April 18. However, by April 19, a second wave of withdrawals began, signaling sustained demand for liquidity.
As of April 20, 758,842 ETH remained in the withdrawal queue—representing approximately 4.08% of all staked ETH still locked in validators. While fears of massive sell-offs dominated pre-upgrade discussions, actual market impact has been more measured and phased rather than explosive.
Notably, Nansen.AI data shows that after April 18, deposit activity briefly outpaced withdrawals, largely driven by inflows into liquid staking protocols such as Lido, Rocket Pool, and Frax Ether. This suggests some users are not exiting the ecosystem but reallocating their ETH into more flexible yield-generating vehicles.
However, the resumption of withdrawals on April 19 may be linked to two factors:
- Binance enabling full withdrawal functionality
- A slight downturn in broader crypto market sentiment
This illustrates that withdrawal behavior is not only technical but also influenced by exchange capabilities and macro price movements.
Understanding Ethereum's Withdrawal Timeline
The Shanghai upgrade introduced two types of withdrawals: full validator exits and partial withdrawals (of staking rewards only). To ensure network stability, Ethereum enforces strict processing limits on validator exits.
Full Withdrawals: A Multi-Stage Process
To initiate a full withdrawal (i.e., exiting a validator with all 32 ETH), stakers must first update their withdrawal credentials from 0x00 to 0x01. At the time of the upgrade, only about 40% of validators had done so. That number has now risen to 85.8%, indicating growing readiness for withdrawals.
Once initiated, full withdrawals follow this timeline:
- 25 minutes: Validator submits exit message
- ~11.7 days: Time in exit queue (due to per-epoch processing limits)
- ~27 hours: Activation delay post-queue
- ~4.25 days: Final withdrawal delay
Total estimated time: approximately 17 days from decision to final receipt of funds.
Partial Withdrawals: Faster Access to Rewards
Partial withdrawals allow stakers to claim accumulated staking rewards while keeping their 32 ETH principal active. These are processed much faster—around 4.27 days—and occur automatically once credentials are set.
This distinction is crucial: many stakers are choosing partial withdrawals to maintain network participation while accessing yield, reducing immediate sell-side pressure.
Rise of Liquid Staking Derivatives (LSDs) in DeFi
One of the most significant shifts post-Shanghai has been the growing dominance of Liquid Staking Derivatives (LSDs) within DeFi.
As of April 20:
- Total ETH locked in LSD protocols: 8,185,856 ETH (~$16 billion)
- Lido leads with 6,071,312 ETH (74.17% market share), TVL at $11.84 billion
Notable growth in smaller LSDs:
- ether.fi: +20.66%
- Frax Ether: +14.37%
- Rocket Pool: +6.69%
LSDs enable users to stake ETH and receive a tokenized representation (e.g., stETH, rETH) that can be used across DeFi for lending, trading, or yield farming—offering liquidity without sacrificing staking rewards.
In terms of Total Value Locked (TVL):
- DEXs: $186.2 billion across 802 protocols
- LSDs: $179.9 billion across 82 protocols
The narrowing gap highlights LSDs’ rising importance as core infrastructure in decentralized finance.
CEX Platforms See High Withdrawal Volumes
Despite LSD growth, centralized exchanges (CEXs) remain major players in withdrawal flows.
Top platforms by completed withdrawals:
- Kraken: 417,000 ETH (31.5%)
- Binance: 91,000 ETH (6.72%)
- Huobi: ~51,000 ETH (3.77%)
Kraken’s high volume likely reflects pent-up demand from users who previously couldn’t access their staked ETH due to regulatory restrictions.
For pending withdrawals, the distribution shifts slightly:
- Binance: ~192,000 ETH (25.2%)
- Kraken: ~181,000 ETH (23.8%)
- Coinbase: ~138,000 ETH (18.1%)
Interestingly, Lookonchain data reveals that among the top 20 depositing addresses post-upgrade, 13 were re-staking ETH they had just withdrawn, totaling 34,198 ETH. Additionally, two large holders re-staked 50,000 ETH via the LSD protocol Agility.
This underscores a key insight: not all withdrawals equal sell-offs. Many participants are rebalancing portfolios or migrating to more liquid staking solutions.
Future Selling Pressure: Drivers and Risks
While immediate market impact has been contained, future selling pressure remains a concern.
Key Factors Influencing Potential Sell-Offs:
- Current APR: ~4.62%, slightly lower than pre-upgrade levels—potentially reducing staking appeal
Entry Price Distribution: Most staked ETH was deposited when prices were between:
- $1501–$2000 (highest concentration)
- $2501–$3000
- $1001–$1500
- MVRV Ratio: Santiment data shows rising MVRV (Market Value to Realized Value) for staked ETH, indicating many withdrawing addresses are in profit—increasing incentive to sell if prices rise further
Additionally, Ethereum’s network activity has softened over the past month due to declining interest in NFTs and reduced transaction volumes—a factor that could weigh on long-term demand.
Frequently Asked Questions (FAQ)
Q: How long does it take to withdraw staked ETH after the Shanghai upgrade?
A: Full withdrawals take approximately 17 days, including queue and processing delays. Partial withdrawals of rewards take about 4.27 days once credentials are configured.
Q: Are all withdrawn ETH being sold immediately?
A: No. Data shows many users are re-staking withdrawn ETH through LSD protocols like Lido or ether.fi, indicating strategic portfolio adjustments rather than panic selling.
Q: What percentage of validators are ready to withdraw?
A: As of April 20, 85.8% of validators have updated their withdrawal credentials to 0x01, up from 40% at upgrade launch.
Q: Is there a risk of network instability due to mass exits?
A: Ethereum’s design limits daily validator exits (~6 per epoch), preventing sudden mass withdrawals and ensuring network security remains intact.
Q: How has the Shanghai upgrade affected DeFi?
A: It boosted adoption of LSD protocols like Lido and Rocket Pool, whose TVL now rivals that of DEXs—solidifying LSDs as foundational DeFi assets.
Q: Could rising profits lead to increased selling pressure?
A: Yes. With many stakers sitting on profitable positions (high MVRV), any significant price rally could trigger profit-taking—especially if staking yields remain flat or decline.
Conclusion: A New Era of Flexibility and Strategy
Ethereum has successfully navigated the Shanghai upgrade with relative stability. The phased nature of withdrawals has prevented a market crash, while re-staking trends suggest structural maturation rather than capitulation.
Looking ahead:
- Short-term volatility may persist due to fluctuating deposit/withdrawal flows
- LSDs will continue gaining traction as preferred staking vehicles
- Network participation is expected to grow as withdrawal wait times decrease and flexibility improves
The ability to withdraw within under 20 days enhances Ethereum’s appeal as a dynamic yield-bearing asset—balancing decentralization, security, and user freedom.