ETH ShangHai Upgrade

April 20, 2023

Key Insights

  • Approximately 562K+ validators staked over 18M ETH in the Beacon chain.
  • Liquid Staking is the largest player in the market, accounting for over 6M staked ETH and 33.3% of the market.
  • We have considered the scenario of maximum selling pressure and conducted calculations on the potential sell-off. Our results indicate that the maximum selling pressure could reach 284,400 ETH, which represents 5.27% of the 24-hour trading volume for ETH. However, when considering factors such as liquidity, returns, and user staking, the selling pressure could possibly be reduced to 59,391 ETH, representing 1.1% of the trading volume.
  • There is no need to worry about the long-term impact of the Shanghai Upgrade’s withdrawals on ETH selling pressure. However, there may be more significant selling pressure within the first five days after the completion of the ETH Shanghai Upgrade.

What is the ShangHai Upgrade?

Ethereum developers have set the target date on 12 April 2023, at 10:27:35 PM UTC, during slot 6209536. EIP-4895 is the key upgrade of the ETH ShangHai Upgrade. The Beacon Chain brought staking to Ethereum, but it functioned as a one-way process, meaning validators could deposit ETH into the Beacon Chain without the ability to withdraw it. With EIP-4895, the primary enhancement in the Shanghai Upgrade, validators will finally be able to access and retrieve their ETH along with any accumulated staking rewards.

As the new era of unlocked ETH approaches, crypto traders are closely watching how the market may respond. Some traders speculate that there will be sell pressure once staked ETH is unlocked, while others believe the Shanghai upgrade will encourage more staking.

How can a Validator Unstake its ETH?

For validators who are concerned about sell pressure, there are two options for unstaking their ETH once Shanghai goes live. The first option is to set up a “withdrawal credential,” which will automatically unstake the rewards earned from the validator. The second option is to fully exit the Beacon Chain by voluntarily sending a message to remove the validator from the blockchain and unstake all 32 ETH.

What are the Two Types of Withdrawals?

  • Partial withdrawals: Balances in excess of 32 ETH (earned rewards) are withdrawn to an Ethereum address and can be spent immediately. The validator will continue to be a part of the beacon chain and validate as expected.
  • Full withdrawals: The validator will exit and stop being a part of the beacon chain. The entire balance (32 ETH principle and any rewards) of the validator is then unlocked and allowed to be spent after the exit and withdrawal mechanism is complete.

How many ETH stake in Beacon Chain?

(, date:04/06/2023)

Approximately 562K+ validators staked over 18M ETH in the Beacon chain. It takes 32 ETH to initially set up a validator and the average balance is 34.01ETH now.

ETH Staked Breakdown


Liquid Staking is the largest player in the market, accounting for over 6M staked ETH and 33.3% of the market. Lido holds a dominant 93.78% share of the liquid staking market and has staked 5,671,616 ETH. Lido is a liquid staking service that offers the stETH token to users as a representation of staked ETH on its platform.

(Sourece:Dune@hildobby, Date:04/06/2023)

The leading exchanges in the staking market are Coinbase, Kraken, and Binance, collectively handling over 4M ETH and approximately 27.3% of the market share. Among these, Coinbase and Binance offer users liquidity through their cbETH and bETH derivatives, respectively.

Nearly 22.4% of the market is also held by unidentified stakers. These might be individuals running nodes from their homes or smaller groups who are running private staking pools.

Liquid Staking vs Illiquid Staking

(Source:Dune, Date:04/06/2023)

The primary components of liquid staking consist of Lido, and centralized exchanges Binance and Coinbase, accounting for 53.7% of the market share. On the other hand, the main constituents of illiquid staking include centralized exchange Kraken and private staking pools, which account for 46.3%. Liquid staking offers liquidity mechanisms to validators, such as stETH, bETH, and cbETH. As a result, 53.7% of users have already attained liquidity for their staked and earned ETH, so the selling pressure for this portion should not be substantial. Perhaps we should be more concerned about the selling pressure arising from the 46.3% portion without liquidity

How Many Stakers are in Profit?

(Source:Dune@hildobby, Date:04/06/2023)

Based on the data, we can observe that a significant amount of ETH staked falls within the price ranges of around 600 USD and 1600 USD.

(Source: Dune@hildobby, Date:04/06/2023)

The proportion of validators who are In the Money and Underwater shows a significant difference, with 28.7% and 71.3%, respectively. Only 28.7% validators are in the Money, and this group, who has earned profits, may have a strong incentive to withdraw their ETH gains and sell them.

Sell Pressure Estimated

First, the staked ETH by validators is divided into two portions for unlocking: the principal portion (32 ETH) is subject to a limited queue for unstaking, and withdrawing means the validator exits the staking; while the profit portion can be withdrawn at any time, and after withdrawing the earnings, the validator still maintains the staked status.

Number of Full Withdrawals per Day


The number of validators that can unstake each day is limited.Currently, the churn limit is 8 and the maximum is 1,800 validators unstaking per day, corresponding to 57,600 ETH being unlocked. As for the profit portion, since it can be withdrawn at any time, its limit is related to the number of blocks produced on the Ethereum chain, allowing roughly 115,200 validators to withdraw daily.

Hence, if full withdrawal requests reach the daily maximum, theoretically, up to 1,800 validators can complete full withdrawals, while the number of daily profit and partial withdrawals would be 115,200 minus 1,800, which equals 113,400.

Data Overview

(Source:BTX Research, Date:04/06/2023)

We can start to calculate the selling pressure following the Ethereum Shanghai Upgrade. Before making any estimations, we need to establish certain assumptions, such as all unstakes will do so as quickly as possible, and all profits will be promptly withdrawn. First, let’s consider the worst-case scenario, which represents the maximum potential selling pressure.

Theoretical Maximum Selling Pressure

Theoretical Result

(Source:BTX Research, Date:04/06/2023)

By utilizing partial withdrawals to extract the profit portion, theoretically, up to 226,800 ETH can be withdrawn daily for 5 days. Meanwhile, full withdrawals can release a maximum of 57,600 ETH per day, with the entire withdrawal process taking 313 days. Therefore, in the first five days following the completion of the Shanghai Upgrade, the theoretical maximum average selling pressure is 284,400 ETH per day, and under the assumption that no new ETH is staked, the entire release will take 313 days.

Better Case for Selling Pressure

We need to consider that 53.7% of validators’ staked ETH has already achieved a certain level of liquidity and doesn’t need to be unlocked. Therefore, the selling pressure from the portion that has already gained liquidity may have been partially released in advance.

Better Case Result

(Source:BTX Research, Date:04/06/2023)

Assuming that 30% of the 53.7% of validators who have already gained liquidity will withdraw ETH and sell, we can estimate that the daily amount of ETH withdrawn through partial withdrawals would be 141,546 ETH, lasting for 3 days. The full withdrawal portion remains at 57,600 ETH per day, lasting for 196 days. Thus, the potential daily selling pressure for the first three days after the completion of the Shanghai Upgrade will be 199,146 ETH.

Considering the Stake Profit for Selling Pressure

Estimated Result for Considering the Stake Profit

(Source:BTX Research, Date:04/06/2023)

From the data mentioned before, we know that In the Money validators account for 28.7%. Combining this with the previous selling pressure calculations, we can determine that the daily profit extracted from the partial withdrawal portion would be 40,624 ETH, lasting for one day. The full withdrawal portion remains at 57,600 ETH per day, lasting for 57 days. Considering that only 1,422 validators have exited so far, users who start to unstake after the completion of the Shanghai Upgrade would need to wait at least 1.1 days before they can begin withdrawing ETH. Thus, the potential selling pressure one day after the completion of the Shanghai Upgrade wil be 86,128 ETH, followed by a daily selling pressure of 57,600 ETH.

Considering the Situation of Users Staking

Estimated Result for Considering the Users Staking

(Source:BTX Research, Date:04/06/2023)

If we consider that after the Shanghai Upgrade, users may be more willing to stake ETH due to the increased liquidity of staked ETH, and if validators maintain the average daily staking quantity of ETH from the past seven weeks, then the selling pressure after the Shanghai Upgrade will potentially be further reduced.


  • Based on data from CoinGecko, the trading volume of ETH in the past 24 hours was 5,392,296 ETH. Considering the maximum selling pressure, the proportion of selling pressure in the first five days would be 5.27%, with the selling pressure being relatively larger. If we consider the factors such as profits, liquidity, and users restaking, the early selling pressure may further decrease to 1.1%. Therefore, based on our estimations, there is no need to worry about the long-term impact of the Shanghai Upgrade’s withdrawals on ETH selling pressure. However, there may be more significant selling pressure within the first five days after the completion of the Shanghai Upgrade.
  • In addition, due to the ever-changing nature of the market, a significant fluctuation or drop in the price of Shanghai upgrades on the day of the event may cause panic among investors. Moreover, market manipulators may capitalize on the Shanghai upgrade event to sell off their ETH holdings, which could potentially increase the likelihood of massive selling pressure on ETH after it is unstaked.




All content was produced independently by the author(s) and does not necessarily reflect the opinions of BTX Research. Author(s) may hold cryptocurrencies named in this report. This report is meant for informational purposes only. It is not meant to serve as investment advice. You should conduct your own research, and consult an independent financial, tax, or legal advisor before making any investment decisions. Nothing contained in this report is a recommendation or suggestion, directly or indirectly, to buy, sell, make, or hold any investment, loan, commodity, or security, or to undertake any investment or trading strategy with respect to any investment, loan, commodity, security, or any issuer. This report should not be construed as an offer to sell or the solicitation of an offer to buy any security or commodity. BTX Research does not guarantee the sequence, accuracy, completeness, or timeliness of any information provided in this report.