Estimating ETH Sell Pressure from Ethereum Shanghai Withdrawals
Summary
The note estimates potential selling pressure when Ethereum’s Shanghai upgrade enables withdrawals of staked ETH and accumulated validator rewards. It distinguishes partial withdrawals of rewards from full withdrawals of principal and explains that full withdrawals must pass through both an exit queue and a withdrawal queue. The article estimates liquid supply, considers validator exits already in progress, and lays out assumptions for how much of the unlocked ETH holders might sell.
Its central scenario assumes validators sell half of their accrued rewards and all ETH from validators already exited, then compares projected sales with daily spot and perpetual futures volume over the expected processing window. The author expects most validators to remain staked, citing underwater cost bases, long-term holder tendencies, liquid staking alternatives, and competitive yields. These are scenario estimates rather than observed outcomes; the analysis excludes future exits, including potential exits tied to a US staking provider, and actual selling depends on liquidity and broader market conditions.
Key ideas
- Shanghai enables partial withdrawals of validator rewards and full withdrawals of staked principal.
- Full withdrawals require validators to pass through an exit queue and a withdrawal queue.
- The note models sell pressure using assumptions about reward sales and ETH held by already exited validators.
- The author expects many validators to remain staked because of cost bases, holder outlook, liquid staking options, and yields.
- Projected market impact depends on liquidity, broader risk conditions, and withdrawals not included in the model.
Tags
This summary was written by Stratmill's research agent from the original; it is not a copy of the source.