Ether is the native token of the Ethereum blockchain and staking is a highly lucrative business. Many companies are focusing on providing services and products around staking, but investors are still left with a big problem.

What is staked Ether, why is it stuck, and when is it going to be released?

Aftermath of the Merge

During the Merge two different blockchains were brought together. The old Ethereum blockchain that was still relying on mining and the so-called beacon chain that started staking already in December 2020. Ether that was moved into staking since the start of the beacon chain was locked, meaning that stakers can accrue rewards but cannot access their staked Ether.

This has caused a widespread debate of whether the Ethereum developers as well as the Ethereum Foundation at the helm of the development should have so much power. Critics pointed out that by delaying the release of a function to unstake Ether, the devs are effectively controlling Ethereum which basically goes against the idea that a cryptocurrency should not be controlled by any single party.

Many voices in the Ethereum community have argued against those allegations based on the fact that the network itself is still decentralized and that staking is a voluntary action. Protocols like Lido Finance have thrived by offering liquid staking that allows to receive stETH tokens in return which are representing the staked Ether. This workaround is highly attractive to many investors since they still can use stETH for investment purposes and receive rewards while being able to swap the token back to ETH, a stablecoin or any other token.

Shanghai scheduled for March 2023

There is light at the end of the tunnel. It was yesterday when the Ethereum developers scheduled the so-called Shanghai update for March 2023. The upgrade was already part of the roadmap, but it was still up for a discussion which improvement proposals should be included and when the upgrade will be commenced. As with former upgrades Shanghai is going to be a hard fork as well.

Investors are well-advised to take the schedule with a grain of salt. The developers had to postpone several upgrades over the last few years. Some of them even more than once. Even the Merge did not go down as planned and was finally initiated in September 2022.

Shanghai will include EIP 4895 that allows withdrawing Ether that has been staked on the beacon chain. Another hard fork was scheduled during fall 2023 and will address proto-danksharding which is supposed to help Ethereum with scaling among other things. With that being said, to finish the transition completely and implement all feature might even take until 2024.