Some signficant discussions in the Consensus Layer call on Friday.
you can listen here
First up, shadow fork 5 went smoothly again, Parithosh ran this one slightly differently with a relatively even split of clients, with just Erigon missing whilst they fix some sync issues.
Significantly though…
There were some discussions around the forecast TTD for Ropsten being too high to hit 8th June. You may have noticed from the Wenmerge timer that time has been stretching out and the Merge is unlikely to take place on Ropsten at the current network activity on 8th June if the TTD also stays the same.
There is likely to be some additional hash rate added to Ropsten, or alternatively a reduced TTD will be calculated to hit the expected date. This does pose questions for the Merge.
At present it has to be said that there is significant difficulty around predicting hash rate and that metric looks to be an extremely unreliable way of forecasting time to TTD. Should miners begin leaving the network pre-merge the time to TTD will continue to be extended in an uncontrolled fashion.
That being said, with The Merge fast approaching, Ethereum’s core developers are turning more attention to the future update codenamed Shanghai and a significant technical update possibly including EIP-4844 – more information is available here https://www.eip4844.com/.
In addition to the technical improvements, staking withdrawals are touted to also be activated in the Shanghai update. With over 12,000,000 Ethereum locked in the staking contract and more joining at over 30,000 ETH a day, this pool of digital tokens represents over $24 Billion at todays date.
Activating withdrawals is another major milestone for Ethereum, Alex Stokes has championed EIP4895 with regard to withdrawals.
Pooja Ranjan and Alex Stokes engaged in a great conversation about EIP4895 and withdrawals.
An important consideration for current and future stakers is that just like the validator joining queue, there will be a validator exit queue, possibly both for full withdrawals and partial withdrawals, it is yet to be finalised.
This exit queue will then impact ETH supply dynamics after a lengthy period of no new ETH entering circulation. If a significant number of stakers join the exit queue those validators could wait weeks or even months to be able to access their ETH.
Some considerations,
Will stakers withdraw and sell their reward or staked tokens?
100,000s of new ETH could re-enter circulating supply from the staking contract after being withdrawn.
Will they restake?
Beacon chain reward ETH could be added to the staking contract blowing out the validator queue to weeks or months and not be added to circulating supply extenuating the supply shock.
Furthermore, a significant influx of stakers once withdrawals are activated would also significantly lower staking rewards.
Outcome? Logic would suggest that ETH that joined the beacon chain pre-withdrawals is dominated by long term hodlers. Given the risks associated with depositing 32 ETH with no firm ability to withdraw it, its unlikely these hodlers will sell validator rewards come Shanghai.
It doesn’t appear like a long wait to see how post merge tokenomics will play out, and no matter how much research is carried out this is a market defining milestone and no one can say for sure what will happen.
