The Ethereum Merge has been one of the most anticipated upgrades in blockchain history, marking the network's transition from a proof-of-work (PoW) to a proof-of-stake (PoS) consensus mechanism. With this shift, concerns have emerged about the potential market impact—particularly whether the unlocking of staked ETH could trigger a massive sell-off. Some analysts predict a bearish outcome, citing the release of approximately 12 million staked ETH after the Merge. However, this fear may be overblown. In reality, three key factors suggest that a large-scale dump is unlikely: staked ETH won’t be unlocked immediately during the Merge, withdrawals will be gradually released, and most stakers are long-term believers treating their ETH like digital real estate.
Staked ETH Won’t Be Unlocked During the Merge
A common misconception is that the Merge itself will unlock all staked Ether. This is incorrect. At the time of the Merge, no withdrawals of staked ETH or staking rewards will be possible. The ability to withdraw staked funds depends on a subsequent network upgrade—commonly referred to as "Shanghai"—which was expected to roll out 6 to 12 months after the Merge.
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This delay ensures that even though Ethereum transitions to PoS, the economic behavior of validators remains stable. There is no immediate liquidity event for stakers, meaning no sudden influx of ETH hitting the market right after the Merge. This buffer period allows the network to stabilize under its new consensus model before introducing withdrawal functionality.
From a technical standpoint, this phased approach reflects Ethereum’s conservative development philosophy—prioritizing security and decentralization over rapid feature deployment. By decoupling the Merge from withdrawal capabilities, developers reduced execution risk and gave time for clients and infrastructure providers to prepare for full withdrawal support.
Withdrawals Will Be Released Gradually
Even after the Shanghai upgrade enables withdrawals, staked ETH won’t flood the market overnight. The protocol enforces a gradual exit queue for validators who wish to withdraw their stake.
Each Ethereum beacon chain validator must signal their intent to exit, and exits are processed in order at a capped rate. Currently, the network allows only about 6 validators to exit per epoch (every 6.4 minutes), which translates to roughly 1,350 ETH per day being eligible for withdrawal.
With over 395,000 active validators at the time of the Merge, it would take more than 400 days—over 13 months—for all stakers to fully exit if everyone chose to do so simultaneously. Of course, this scenario is highly unrealistic.
This built-in throttling mechanism serves an important purpose: it prevents network destabilization caused by mass exodus events. It also acts as a natural market stabilizer by spreading potential selling pressure over many months or even years.
Staked ETH Is Treated Like Digital Real Estate
Who are the people staking ETH today? Are they short-term traders waiting to cash out at the first opportunity? Or are they long-term believers committed to Ethereum’s success?
Evidence suggests the latter.
Only about 35% of staked ETH comes through liquid staking protocols like Lido, which allow users to maintain liquidity via derivative tokens (e.g., stETH). These users may be more inclined to trade, but they still represent a minority of total staked supply.
In contrast, around 30% of staked ETH is controlled by solo stakers—individuals who run their own validator nodes. Running a solo validator requires technical expertise, a minimum of 32 ETH, and ongoing maintenance. These are not casual investors; they are deeply committed to Ethereum’s infrastructure and long-term vision.
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For these individuals, staking isn’t just an investment strategy—it’s participation in securing a decentralized future. Their behavior mirrors that of real estate investors who buy property with a multi-year horizon. They don’t panic-sell when market conditions fluctuate; instead, they focus on long-term appreciation and yield generation.
Moreover, many institutional stakers—including exchanges, custodians, and DeFi protocols—are also likely to hold post-withdrawal. Their business models often rely on providing staking services or maintaining exposure to Ethereum’s ecosystem growth.
FAQ: Addressing Common Concerns
Q: When can stakers withdraw their ETH after the Merge?
A: Withdrawals were enabled in early 2023 via the Shanghai-Capella upgrade, approximately 6–9 months after the Merge. Before this upgrade, no withdrawals were possible.
Q: Could 12 million staked ETH flood the market once withdrawals start?
A: No. Even with full withdrawal access, protocol-level limits restrict how many validators can exit per day. A full mass exit would take over a year, spreading any potential sell pressure over time.
Q: Is there a risk of a coordinated sell-off by large staking pools?
A: While centralized staking services like Coinbase or Lido manage significant portions of staked ETH, their business incentives align with network stability. Sudden dumps would harm their reputation and long-term revenue from staking fees.
Q: How does gradual withdrawal affect ETH price stability?
A: The slow release mechanism reduces short-term volatility by preventing supply shocks. Combined with strong demand from DeFi, NFTs, and Layer 2 ecosystems, this supports healthier price discovery.
Q: Are retail stakers more likely to sell than institutions?
A: Not necessarily. Retail users who operate solo validators tend to be highly dedicated. Data shows many have held ETH for years and view staking as both ideological and financial commitment.
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Final Outlook: No Imminent Dump Expected
The idea that 12 million staked ETH will cause a market crash after the Merge is based on outdated assumptions and flawed logic. In truth:
- Staked ETH was not unlocked during the Merge.
- Withdrawals occur slowly due to protocol-enforced exit limits.
- Most stakers are long-term holders with strong conviction in Ethereum’s future.
Market psychology often amplifies fears around supply unlocks, but Ethereum’s design intentionally mitigates such risks. The combination of delayed withdrawals and gradual release mechanisms demonstrates a mature approach to economic security.
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As Ethereum continues evolving—with future upgrades like Proto-Danksharding and EIP-4844 on the horizon—the role of staking will only grow in importance. Rather than fearing the unlock of staked ETH, investors should see it as a sign of increasing maturity, transparency, and user empowerment within one of the world’s most robust blockchain ecosystems.
In summary: no, staked ETH will not be dumped en masse after the Merge. The system is designed to prevent exactly that—and so far, it’s working as intended.