Coinbase Expects Surge in Unstaking Requests Following Shanghai Upgrade
Coinbase is bracing for an influx of staking withdrawal requests following an upcoming Ethereum upgrade, which will enable the functionality for its users. The largest cryptocurrency exchange in the US has warned that unstaking requests could take months to be fully processed, as the company anticipates high demand for the service.
Coinbase shared these details while explaining how the upgrade will affect its business during an announcement on Wednesday.
Shapella Upgrade to Allow Unstaking of Ethereum for the First Time
In a recent blog post, Coinbase has announced that the upcoming Shapella upgrade, consisting of the Shanghai and Capella updates, will finally enable users of Ethereum to unstake their Ether (ETH). This feature has been long-awaited since the launch of the Beacon chain in 2020, which saw the execution layer of Ethereum merge with its beacon chain, resulting in users’ staking holdings being locked up.
This temporary situation has allowed staking providers, such as Coinbase, to allow users to stake ETH on their platform but has prevented them from withdrawing their staked tokens.
However, the completion of the Goerli testnet upgrade on Tuesday has paved the way for the official rollout of Shapella, which is expected to occur by mid-April. This upgrade will enable Coinbase users to unstake their ETH for the first time, resulting in high demand for the unstaking service, as Coinbase anticipates.
According to Coinbase, the delay in processing unstaking requests is due to the nature of the Ethereum protocol. The process involves a series of steps, including a waiting period before the staked ETH can be unstaked, a period of time during which the protocol processes the request, and then finally, the release of the unstaked ETH to the customer’s account.
Coinbase’s Preparation for Increased Demand
Coinbase also warned that there could be a surge in demand for unstaking after the Shapella upgrade, which could further slow down processing times. As a result, the company has advised its users to plan ahead and only stake ETH that they can afford to leave locked up for an extended period.
Despite the potential delays, Coinbase remains optimistic about the upgrade and the impact it will have on the Ethereum ecosystem. The ability to unstake ETH will give users more flexibility and control over their investments, and could encourage more people to participate in staking and other activities on the Ethereum network.
Coinbase offers its customers a solution to expedite the unstaking process with the use of cbETH, a staked ETH derivative on the exchange. It provides a liquid staking option that enables customers to trade their ETH while it remains locked up. This offers customers flexibility, as they can redeem their cbETH later.
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