Staking withdrawals

Every Ethereum validator has withdrawal credentials that say where its ETH may go. Early validators used a BLS key format that could not receive funds, so before the Shapella upgrade in April 2023 staked ETH was locked. Shapella let validators point their credentials to an execution-layer address, and from then on the protocol sweeps through validators automatically, sending payments without any transaction from the staker.

There are two kinds of withdrawal. A partial withdrawal skims the balance above the validator's limit, which in practice pays out rewards on a rolling basis. A full withdrawal happens after a validator exits through the queue and returns the entire balance. Pectra added compounding credentials, which let a validator keep rewards staked up to 2,048 ETH, and allowed the withdrawal address itself to trigger an exit, useful for staking services and smart-contract custodians.

The withdrawal address can be set only once and cannot be changed later, so a mistake or a compromised address is permanent. Exits and payouts follow queues, so withdrawals are not instant, and liquid staking tokens add their own redemption rules on top.