• Ethereum testnet Zhejiang has successfully processed staked ETH withdrawals. 
• The testnet is the first of three dress rehearsals towards the Shanghai upgrade.

The Ethereum ecosystem is another step closer to its historic transition to a fully-featured proof-of-stake network as a testnet, Zhejiang, processed its first withdrawals of staked ETH. Developers’ and users’ test code changed to their application with testnets, which are duplicates of the main blockchain. Following the first testnet upgrade are the Sepolia and Goerli updates. 

Ethereum Testnet Zhejiang Conducts Staked ETH Withdrawals

According to an explorer website that tracks transactions on the system, the Ethereum testnet performed the withdrawal process early Tuesday. This happened after it launched last week. Also, the upgrade was triggered at epoch 1350 at 15:00 UTC and concluded at 15:13 UTC. 

The Zhejiang upgrade is designed as a dress rehearsal in preparation for the Shanghai update. The Shanghai update is expected to occur in March, and it is the blockchain’s first major upgrade since its transition to POS in September last year. Following the transition, Ethereum became more energy-efficient compared to the proof-of-work protocol.

After the hard fork, the network validators will have access to withdraw 16 million staked ETH. Ethereum began to use validators in place of miners after the Merge. The validators were required to stake 32 ETH with the chain to be able to participate in the block validation princess. The more the ether staked, the more the validators are likely to be selected to “propose” the next block of Ethereum transactions. They were also open to certain network rewards. 

Validators at the Brink of Cashin Out

Notably, the Ethereum ecosystem informed validators that the accrued rewards, as well as their staked ETH would be locked till another update happens to the chain. These participants have been staking ETH and gathering rewards since the release of the proof-of-stake “Beacon Chain” in December 2020. The launch of the Beacon Chain was the first move in aspiration for the Merge. After years of staking ETH, validators can finally cash out their portions. 

Speaking to CoinDesk on the recent Ethereum testnet, a DevOps engineer at the Ethereum Foundation stated:

On the Zhejiang testnet, partial and full withdrawals as well as BLS changes are included in the execution payload. We have a successful fork.

Fingers are crossed on the possible impact of the update on the Ethereum ecosystem. While some believe that the Shanghai upgrade may encourage more staking, others say the price of ETH may decline due to pressure from stakers who may rush to withdraw their funds when the hard fork is over. 

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