Coinbase Expects Demand for ETH Unstaking to Surge

On Wednesday, Coinbase outlined the Shanghai upgrade‘s impact on its operations and stated it would take “weeks to months” for unstaking requests to be fully handled. The cryptocurrency exchange anticipates a rush of stake withdrawal applications once Ethereum devs enable the function next month.

In September 2022, The Merge changed Ethereum’s proof-of-work (PoW) algorithm to proof-of-stake (PoS), although stakers’ holdings continued to hold up. Due to the temporary effects of this merger, staking providers like Coinbase currently permit customers to stake Ethereum on their platform, but not to withdraw their funds.

Unstaking of ETH Begins in mid-April on Coinbase

According to a blog post, Ethereum users will be allowed to unstake their Ether (ETH) for the very first time in mid-April since the Beacon chain began in 2020 due to the Shanghai and Capella upgrades, also known as the Shapella upgrade. 

Moreover, ETH holders are not required to participate in an endless lockup period and can invest more. According to Coinbase, the company would only serve as a gateway to transfer unstaked ETH to consumers after the protocol has delivered it and also stressed that staking requests are conducted on-chain.

Coinbase noted:

 “Unstaking requests will open to all Coinbase customers at the same time and will be relayed to the Ethereum protocol and queued based on when they are received.”

Additionally, it stated that users will be able to submit unstaking requests from their Coinbase accounts after the upgrade, which would take around 24 hours to become available. However, the exchange said that “customers may need to remain patient,” while adding that it anticipates that “the Ethereum protocol will take weeks to months to process unstaking requests immediately following the upgrade.”

In August last year, in response to a question about the centralization of staked ETH from an Ethereum expert, Brian Armstrong, the CEO of Coinbase, stated that he thinks the company would opt to shut down its staking operations rather than strictly comply if in case any regulatory pressures arise.