- The first ETH staking rewards could be released in March 2023
- Developers have scheduled in the next hard fork, which would include this, for that timeframe
- There have been fears that an ETH dump will take place, but withdrawals will likely be staggered
Ethereum developers have targeted March 2023 as the point where they will release ETH that stakers have accrued since the protocol shifted to proof-of-stake in September. This will come with the network’s next hard fork, ‘Shanghai’, and will include code known as EIP 4895, which will allow Beacon Chain-staked ETH withdrawals. This has raised questions over whether ETH will temporarily dump as a result, although there will likely be plans in place to mitigate against this.
Ethereum Rewards Locked for Six Months
Ethereum stakers began earning their rewards for their staking efforts after the merge proof-of-stake almost three months ago, but these rewards were locked until the protocol had fully transferred to the proof-of-stake consensus mechanism. This was the case for those staking using their own equipment and those staking through exchanges. The news came as a shock for some who had sent their ETH to the smart contract last year, but there was nothing they could do about it.
The Shanghai upgrade will also address the implementation of the “EVM Object Format” (EOF), which is a collection of Ethereum Improvement Protocols (EIPs) that effectively upgrades the Ethereum Virtual Machine, the environment where Ethereum is able to execute smart contracts. The EIPs concerned are EIP 3540, EIP 3670, EIP 4200, EIP 4570, EIP 5450.
Release Will Likely be Staggered
There are currently over 16.4 million ETH staked, with an annual staking return of 4%, which has led to some fears that a huge ETH dump will take place once the earned coins are unlocked. There still doesn’t seem to be any formal notice of how the unlocking will take place, but one storied Ethereum commenter, writing on Twitter back in May, suggested that the release will be staggered to avoid such a scenario:
2. Unlocked ETH will be released slowly
Even when withdrawals are enabled, all staked $ETH won’t be immediately available.
There will be an exit queue which may take more than a year in the worst case scenario or several months in a more realistic one. Release will be slow.
— korpi (@korpi87) May 23, 2022
Such an approach would make sense and will certainly have been borne in mind by Ethereum developers, but we will have to wait until closer to the time to see how it will work in practice.