The merge and ETH distribution
When merge?
It is difficult to ascertain exactly when the merge will be as it depends on many external factors mainly controlled by the ethereum foundation and core devs. Allowing withdrawal of staked eth. This is staking for the long haul at the end of the day. At phase 2.0 of the merge eth withdrawals should be active. You can read more up to date information about the merge here https://ethmerge.com/
Distribution at merge
At a high level this is what will happen at merge once withdrawals are enabled.
User stakes vETH2 into a contract
Admins exit validators required to satisfy the exit need
Funds are moved to the contract
A virtual price is set, denoting a price for each vETH2, that includes the gains from staking, minus fees.
Users can then claim their earned ETH
At merge funds can be exited to Beaconchain addresses and moved back to L1 ethereum.
The virtual price of vETH2, i.e. deposited ETH + gains is calculated off chain. Anyone can run the open source script and see the current results on our frontend at sharedstake.org. We use the beaconcha.in API currently.
We will deploy a contract that will allow users to stake their vETH2 to gauge how many validators will need to be exited.
At weekly epochs, or longer epochs based on the validator exit queue, we will replenish ETH in this contract and allow users to withdraw ETH against their vETH2, burning it in the process.
To prevent an exit rush, where users buy up liquid vETH2-ETH and exit before LPs have a chance to unwind their position, there will be a minimum 1 week epoch between staking vETH2 for exit and actually being able to exit. This delay between staking vETH2 to signal an exit and ETH arriving in the contract may be even longer as the Ethereum Foundation expects there to be a withdrawal queue. For reference our first stakes took 3 weeks to go live, so a similiar wait may occur on exit.
veSGT/NFT holders may be able to get a reduced queue length if its possible.
You can read and review our draft contract for this process here:
https://github.com/chimera-defi/SharedDeposit/blob/main/contracts/sharedDeposit_v2.sol#L148
Suggestions welcome
Caveats
Withdrawals may not be available at merge, and the Ethereum Foundation may enable them in Phase 2 which does not currently have a set deadline
There may be an exit queue requiring some time between us signalling an exit and the funds actually being exited and retrievable. For reference our first stakes took 3 weeks to go live, so a similar wait may occur on exit.
For version 1 of our protocol, the virtual price pools all validators together. This minorly diluted earnings of early stakers.
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