Crypto Analyzer

Understanding the Exit Queue and Withdrawal Period for Ethereum’s Shanghai Upgrade

The Shanghai upgrade of Ethereum is scheduled to occur in March. It will allow for stake withdrawals for first time since 2020. Contrary to other Proof of Stake (PoS), such as Cosmos which has a fixed withdrawal period of 21 day, Ethereum’s withdrawal time is dynamic and depends on how many validators are exiting at any given moment.

Exiting validators must pass through two stages. The withdrawal period and the exit queue. A few variables define the exit queue, which includes the total number of validators, minimum churn limit (set to 4) and churn limit quote (set to 216 or 65 536). These variables are used for calculating the churn limit. This is the maximum number of validators who can exit the set at each epoch (32 blocs).

Assuming that there are currently 500,000 validators the churn limit is 7. The churn limit increases with the increase in validators. The entry queue, which is the rate at which validators can enter the validator sets, is also subject to the churn limit.

The withdrawal period for validators that have not been slashed would take 256 epochs (approximately 27 hour). It would take 8,192 epochs (approximately 26 days) if they were slashed. This discrepancy is meant to discourage bad actors.

It is hard to predict what the withdrawal period will look like after Shanghai. Many people believe that the queue could be long (70+ days), as large entities will need to change their stake status. The withdrawal period will eventually decrease to a manageable amount. The withdrawal period will not be as long as Cosmos’ but it will get clearer when withdrawals are active.