The Shapella upgrade, consisting of the Shanghai and Capella upgrades, will enable unlocking for the first time since ETH staking was introduced in December 2020. Although Ethereum moved from Proof of Work (PoW) to Proof of Staking (PoS) in September 2022, users were still unable to withdraw their frozen ETH. The Shapella update will finally enable this full withdrawal process and is expected to be completed by mid-April 2023.
Coinbase users will be able to make unlock requests from their accounts soon after the Shapella update is completed. All unlock requests will be processed on-chain, and Coinbase's role will simply be to act as an intermediary between customers, validators and protocols.
Demand for network unlocking is expected to be high soon after the upgrade, as this is the first time validators have been able to unlock funds since December 2020. Since Coinbase does not control the unlocking process, an exact timeline for processing unlocking requests cannot be provided. Despite this, an estimate will be provided based on Ethereum network processing times.
For those seeking immediate liquidity, Coinbase offers a token that allows users to unlock the value of their frozen ETH. Users can wrap their frozen ETH to cbETH in the Coinbase app to sell it or use it in DeFi. There are no fees for wrapping to cbETH and users continue to earn staking rewards as long as they hold the token. Users can also unlock their cbETH to claim the underlying ETH and any accumulated rewards.
For Coinbase Prime customers, ETH staking features will be disabled shortly before the Shapella upgrade. They will continue to be disabled for the duration of the upgrade while unlocking is enabled. It is intended to enable unlocking for Prime customers within 24 hours after the upgrade is complete.
For Coinbase Exchange customers, functionality will not be affected and customers with ETH and ERC-20 balances should not experience any impact. However, for Coinbase Wallet users, there is expected to be minimal to no impact on ETH and ERC-20 balances, as well as NFT or DeFi positions on the Ethereum network.
For Coinbase Cloud customers, they are expected to experience a routine upgrade with about 10 minutes of downtime prior to the Shapella upgrade. Customer infrastructure should experience little to no downtime when the upgrade block is passed and changes will be backwards compatible.