Shapella Upgrade Leads to Ethereum Investors Facing Withdrawal Delays
Cryptocurrency investors are experiencing delays in withdrawing their funds deposited on the Ethereum blockchain after a major software upgrade. The software upgrade, known as “Shapella,” was expected to unlock over $30 billion worth of ether. The investors had deposited the investment on the Ethereum blockchain in return for interest. The delays are due to the limits in the amount of transactions the blockchain can process. This highlights potential shortcomings as Ethereum strives to become widely used for instant payments.
Withdrawal Queue and Delays
Investors could not withdraw their funds deposited via “staking” on the Ethereum blockchain until the upgrade was completed. The delays have left around $1.4 billion worth of ether stuck in a withdrawal queue as of Thursday, according to blockchain data firm Nansen. The limits in validator withdrawals were in place for security reasons, said Nansen analyst Martin Lee.as if the majority of validators exit, the Ethereum network would be vulnerable to attacks and bad actors.
Impact of Shapella Upgrade
The delay in withdrawal highlights the limits of Ethereum’s ability to process transactions. Additionally, it highlights the potential shortcomings as a widely-used financial infrastructure. Ethereum has grown popular for offshoots of the crypto market such as decentralised finance and NFTs, but it has yet to become used in mainstream payments, finance or commerce. The Ethereum Foundation, the body that speaks for the network, did not comment on the delays.
Binance Exchange Plans to Resolve the Delay
Binance, a major exchange, has informed its users that they would be able to withdraw their ether from its staking product from April 19th. However, it may take “15 days to several weeks” to process these transactions due to processing limitations on the Ethereum network. They plan to set a daily ETH redemption quota for each user on its website.
Potential Resolution of the Delay
Nansen’s Lee said that the backlog will likely take weeks to clear, after which, depending on the average daily “unstaking” amount, it would take just hours or a couple of days.
Source : Reuters