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In the dynamic landscape of cryptocurrency, innovative tools are continually forging the future of blockchain technologies. Today, we're excited to introduce another such tool, an Ethereum Withdrawals Simulator built by 21Shares, the world's largest issuer of cryptocurrency ETPs. This simulator is based on 21Shares' algorithms and methodology and is available on Blockdaemon's existing Shapella site, which was created in partnership with Metrika.
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This new simulator builds upon the strong foundation of high-quality community tooling, offered to the Ethereum ecosystem, in a collaborative approach between Blockdaemon, Metrika, and 21Shares.
Ever since the announcement of Blockdaemon’s initial partnership with Metrika in 2022, both companies have made significant strides towards providing understandable, clear, Ethereum data to the wider ETH community. In Q1 2023, in anticipation of Ethereum’s Shapella hard fork, Blockdaemon introduced an Ethereum validator queue dashboard, developed in conjunction with Metrika, and powered by their high-quality data. As a leading operational intelligence & risk management company for blockchain networks and financial institutions, Metrika’s robust data provides a clear value-add to the wider Ethereum staking ecosystem.
The Blockdaemon & Metrika dashboard allows users to track both the activation and exit queues for Ethereum mainnet and Goerli testnet. The dashboard is a valuable community resource designed to simplify the reporting of how long activations and exits actually take.
In addition, Metrika’s Withdrawals Overview Dashboard, sponsored with a grant from the Ethereum Foundation, enables community members to monitor the Ethereum withdrawal process with ease.
This recent partnership between Blockdaemon, Metrika and 21Shares has culminated in the addition of the Ethereum Withdrawal Simulator - a tool built by 21 Shares and positioned as a game-changer for Ethereum stakeholders. This builds on the already successful deployment of the Ethereum Validator Queue Tracker.
Understanding the significance of this innovation requires a brief dive into Ethereum and its staking mechanism. Ethereum’s transition to proof-of-stake was an enhancement to the Ethereum blockchain. This update enhanced the sustainability of the Ethereum network by the transition to a proof-of-stake (PoS) consensus mechanism from the proof-of-work (PoW) system.
In the current PoS system, validators replace miners and are selected to create new blocks based on the quantity of Ethereum they possess and are ready to 'stake' as collateral. This staking process, although promising significant returns, also carries risk as staked Ethereum becomes 'locked' in the network until specific network milestones are achieved.
This is where the innovation from Blockdaemon and 21Shares - the ETH Withdrawal Simulator - steps in. It empowers potential Ethereum stakers to predict and comprehend the timelines linked with staking and importantly, the withdrawal of their Ethereum assets in the Ethereum network. Using real-time data, the tool calculates possible outcomes, supporting users in their decision-making process.
The Shapella update was significant, as it introduced the ability for ETH stakers to withdraw their staked assets for the first time.
However, rather than seeing a surge in withdrawals, the Ethereum ecosystem witnessed an influx of staked ETH post-Shapella. It took merely 2 weeks for the activation queue to surpass the exit queue in length.
The following screenshot shows that, as of June 12 2023, there are over 94k validators activating, forming a queue of over 46 days.
This represents a significant growth in the number of ETH stakers, compared to the relatively small exit queue.
21Shares team developed a methodology and an API which leverages algorithms, historical data and current network conditions to predict the duration for which the staked ETH may remain locked in the network. Users can enter the amount of ETH they plan to stake, and the ETH Withdrawal Simulator offers an estimated range of withdrawal timeframes, bringing much-needed clarity to an intricate and volatile environment.
The ETH Withdrawal Simulator is more than just a tool; it symbolizes the type of inventive solutions that are born from strategic alliances in the crypto industry. It further highlights the importance of nurturing a user-friendly ecosystem in the crypto sphere, where complexity often forms an entry barrier.
To conclude, the Blockdaemon and 21Shares ETH Withdrawal Simulator has significantly enriched the Ethereum staking landscape. It not only equips users with essential knowledge and understanding but also aligns with the broader vision of Ethereum by making it more accessible and understandable to a wider audience.
As the Web3 world continues to expand and evolve, tools such as the ETH Withdrawal Simulator will play a vital role in improving user experience, minimizing risk, and promoting the adoption of blockchain technologies. We eagerly await the continued growth of these platforms and the inception of new, ground-breaking tools.