Optimize Your Exit Strategy: Introducing the Ethereum Withdrawal Simulator for Precise Staking Withdrawal Estimation
Jan 29, 2023
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Despite Ethereum's well-designed model to stabilize the network, estimating the time required for withdrawals is often overwhelming with different methods and scattered all over the Internet. Sensing this strain on stakeholders, 21Shares pioneered a standardized methodology and algorithm to provide a real-time estimation for withdrawals on the Ethereum network. Our mission is to make crypto easy and accessible, as such we’re pleased to announce our partnership with Blockdaemon and Metrika to release the 21Shares Ethereum Withdrawal Simulator (EWS) interface powered via our API.
TL;DR:
- The average investor struggles to estimate how long it will take to withdraw due to the accessibility of on-chain data and the lack of a real-time and interactive interface
- Now, stakers and investors can better plan for liquidity and risk management by accessing the simulator and estimating the time required to withdraw from the network**
Background:
Staking was introduced to Ethereum in December of 2020, eventually followed by the Shanghai upgrade in April of 2023. Since then, Ethereum has processed over 6M withdrawals, with 3M ETH ($5.6B) withdrawn. However, there is a daily limit to the number of validators that can exit on the network. While this helps to avoid bank runs, it leaves stakers wondering how long they’ll have to wait to withdraw.
The more validators looking to exit, the longer it can take to withdraw. That number peaked on April 15 at 22.2K exits, a process that took approximately 19 days. An estimated timeline is useful, but may not provide investors with the details they want to make an informed decision.
The 21Shares Ethereum Withdrawal Simulator allows investors to access on-chain data to calculate the date of receiving both the principal and reward from ETH staking.
Methodology:
1. Types of Withdrawals
Partial WithdrawalFull WithdrawalOnly staking rewards will be withdrawnBoth staking rewards and principal will be withdrawnAutomatic processValidators need to raise an exit request manually or get slashedStill an active validator after partial withdrawalWill exit and no longer validate the network after full withdrawalTakes a shorter time than full withdrawalTakes a longer time than partial withdrawal
2. Queues for Withdrawals
For full withdrawals, exiting validators must first go through the exit queue. With 602k validators, 9 can exit every epoch (2025 validators per day). After exiting the network, exited validators must wait for 256 Epoch (~27.3 Hours) if they are unslashed so that the network can flag them as “withdrawal possible”. The last step is going through the withdrawal queue, in which the network can process 16 withdrawals per block (115,200 withdrawals per day, assuming no missed block).
For partial withdrawal, the eligible validator will go through the withdrawal queue directly together with other exited validators that have been flagged as “withdrawal possible”
3. Limitation of the Methodology
- The estimation is only applicable to unslashed validators
- Validator Index is not considered when calculating the time required in the withdrawal queue
- Using historical number of missed blocks as a discount in the number of withdrawals that can be processed per block in the withdrawal queue
- Missed Epoch has not been taken into account for calculating the time required to exit in the exit queue as there was no missed epoch since the merge
Enabling people to access core features of crypto will help drive mass adoption. That’s why we’ve wrapped this methodology in a proprietary API, making it easier for any developer to use it in their applications. It powers the EWS in partnership with Blockdaemon, but that’s just the start. By sharing access with more teams, we can work together to make crypto more accessible to more people. If you want to partner to lower the barrier of entry, please give us a shout at partnerships@21.co.
Closing Thought:
The industry needs a better way to estimate the amount of time required to withdraw staked ETH from the network, and that’s why we’re so excited to release in real time the 21Shares Ethereum Withdrawal Simulator. It’s live now, so you can try it out on Blockdaemon.
Disclaimer
This document is not an offer to sell or a solicitation of an offer to buy or subscribe for securities of 21Shares AG (21Shares). Neither this document nor anything contained herein shall form the basis of, or be relied upon in connection with, any offer or commitment whatsoever in any jurisdiction. Nothing contained herein represents investment advice and investors should take their own independent advice.
This document and the information contained herein are not for distribution in any jurisdiction in which the distribution or release would be unlawful. This document does not constitute an offer of securities for sale in or into the United Kingdom, the EEA, United States, Canada, Australia or Japan. The securities of 21Shares have not been and will not be registered under the United States Securities Act of 1933, as amended (the “Securities Act”), and may not be offered or sold in the United States absent registration or an applicable exemption from, or in a transaction not subject to, the registration requirements of the Securities Act. There will not be a public offering of securities in the United States.
Within the United Kingdom, this document is only being distributed to and is only directed at: (i) to investment professionals falling within Article 19(5) of the Financial Services and Markets Act 2000 (“FSMA”) (Financial Promotion) Order 2005 (the “Order”); or (ii) high net worth entities, and other persons to whom it may lawfully be communicated, falling within Article 49(2)(a) to (d) of the Order; or (iii) any other persons to whom this document can be lawfully distributed in circumstances where section 21(1) of the FSMA does not apply.
Within the EEA, this communication is only addressed to and is only directed at qualified investors within the meaning of the Prospectus Regulation (EU) 2017/1129. This document constitutes an advertisement within the meaning of the Swiss Financial Services Act (the “FinSA”) and not a prospectus.21Shares is not an investment advisor and makes no representation regarding the advisability of investing in any such investment product or other investment vehicle. A decision to invest in any such investment product or other investment vehicle should not be made in reliance on any of the statements set forth on this website. Prospective investors are advised to make an investment in any such product or other vehicle only after carefully considering the risks associated with investing in such products, as detailed in an offering memorandum or similar document that is prepared by or on behalf of the issuer of the investment product or other investment product or vehicle.
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Investments into crypto currencies and/or digital assets are subject to material and high risk including the risk of total loss. The calculated prices may not be achieved by investors as the calculated price is based on prices from different trading platforms. Furthermore, an investment into crypto currencies and/or digital assets may become illiquid depending on the trading platform or investment product used for the specific investment. Investors should carefully review all risk factors disclosed by the relevant trading platform or in the product documents of relevant investment products.
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