The Ethereum Shanghai upgrade, also known as EIP-4895, marks a significant evolution in Ethereum’s transition to proof-of-stake. This upgrade introduces major changes to how validators interact with the Ethereum network, particularly concerning the withdrawal and unstaking of ETH. Here’s a detailed overview and how it will impact Ledger Live users.
Overview of the Shanghai Upgrade
Staking Rewards and Unstaking ETH:
Unlocking Rewards: Validators can now withdraw their staking rewards.
Unstaking ETH: Validators will be able to unstake their ETH and access their entire balance.
Additional Improvements:
The Shanghai upgrade includes three other improvement proposals focused on:
Reducing high gas fees
Improving transaction processing times
Enhancing overall network performance
Withdrawing Rewards and Unstaking ETH
Withdrawal Process:
Two Stages: The withdrawal process involves exit and withdrawal queues.
Partial Withdrawals:
Definition: Includes ETH above the 32 ETH staking minimum, typically consisting of staking rewards.
Process: Validators can bypass the exit queue and enter the withdrawal queue immediately. They only need to provide a withdrawal address once; no additional gas fees are required.
Automatic Withdrawal: Rewards will be withdrawn automatically after setup.
Full Withdrawals:
Definition: Includes both the base 32 ETH and any accumulated rewards.
Process: Validators must go through both the exit and withdrawal queues.
Exit Queue: Validators sign and broadcast a voluntary exit message, which is then submitted to a beacon node. No gas fees are involved.
Withdrawal Queue: After exiting, validators wait in the withdrawal queue. The wait time depends on whether the validator has been slashed:
Not Slashed: 256 epochs (~27 hours)
Slashed: 8,192 epochs (~36 days)
Final Step: Once flagged as withdrawable and credentials are provided, the balance will be transferred in full during the next sweep.
How It Affects Ledger Live Users
Staking with Lido:
Unstaking stETH: Users can unstake their stETH to receive ETH at a 1:1 ratio. Note that rewards cannot be unstaked before May.
Staking with Kiln:
Claiming ETH: After the validator exits and clears the withdrawal queues, users can claim their ETH from the Rewards tab. Similar to Lido, rewards cannot be unstaked before May.
Steps for Ledger Live Users
Ensure Updates:
Ledger Live: Make sure you are using the latest version of Ledger Live.
Firmware and Apps: Update your Ledger device firmware and installed apps for compatibility with the Shanghai upgrade.
Monitor Your Staking:
Staking Status: Keep track of your staking status and withdrawal options through Ledger Live’s staking interfaces.
Check for Updates: Watch for any updates or changes to staking functionalities that may affect how you interact with your staked ETH and rewards.
Contact Support:
If you experience any issues with staking, unstaking, or withdrawing rewards, contact Ledger support for assistance.
The Shanghai upgrade will make significant changes to how Ethereum validators and users interact with their staked ETH and rewards, improving flexibility and efficiency within the Ethereum network.
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