Withdrawal contracts for Ether staked on Ethereum 2.0 could become available as early as Q1 2021 allowing decentralized Eth2 staking service Rocket Pool to launch.

While Phase 0 of Eth2’s roll-out was launched with its Beacon Chain on Dec. 1, the 900,000 Ether deposited by stakers will not be available for withdrawal until Phase 1.5 — which is expected to arrive around early 2022.

Last week, Ethereum developer Danny Ryan introduced a new proposal that would allow for “Simple (but expressive) withdrawal contracts to be written today”.

Should the proposal be implemented, he estimates that “80% of withdrawal contract use cases will be satisfied,” but he admitted, the solution isn’t going to unlock complete functionality:

“There are potentially more sophisticated features that cannot be built with the simple scheme until Beacon Chain reads are implemented, but I would argue that most designs can be accomplished.”

Unfortunately the new contracts will not in themselves enable withdrawals, but they will allow staking pools to initiate payouts in future.

Rocket Pool is an Australian-based decentralized staking platform designed to allow hodlers with less than the mandatory 32 ETH to pool their funds for staking. In a blog post today it indicated the platform is waiting for smart contract withdrawals to be enabled before it can go live.

Founder David Rugendyke explained that since withdrawals aren’t supported in Eth2 currently, “in order to democratize staking in the current environment, projects must utilize a centralized custodian to control validator withdrawal keys.”

He added the trust issues involved with this "are not worth sacrificing our core values and risking user deposits.” Rugendyke called Ryan's proposed solution "a fantastic step" and something "we want to show massive support for!" He explained in an email to Cointelegraph:

"Withdrawals themselves won't be available until 18+ months most likely, but what will hopefully be enabled soon is the ability to specify an ETH1 smart contract address that WILL be able to receive that withdrawal in 18+ months. So it's not that you'd be able to withdraw in Q1, just specify a withdrawal address that is a smart contract, this would enable trustless staking which we are aiming to use first and foremost."

Blockchain firm Consensys has noted Ryan isn’t the only potential solution. Ethereum developer Jeff Coleman’s "Dirt Simple Withdrawal Contract" proposal also provides a solution for withdrawals. Ethereum staking service Attestant co-founder Jim McDonald’s has another proposal called "Simple Transfers of Excess Balance".

There are a variety of stop gap measures for the interim period until withdrawals are enabled. Staking firm LiquidStake has taken a different approach, allowing stakers to take out a USDC loan on their staked ETH in order to provide better liquidity to users. Coinbase has also announced support for Eth2 staking, however, they will provide the liquidity for users:

"While staked Eth2 tokens remain locked on the Beacon chain, Coinbase will also enable trading between Eth2, ETH, and all other supported currencies providing liquidity for our customers."

In the past, Ethereum co-founder Vitalik Buterin warned users of risks associated with using third-party staking services.

This story has been updated with comments from Rugendyke indicating that withdrawals will not be available for 18 months, but that the new contracts will enable Rocket Pool to launch staking.