Withdrawal activation through a hard fork and the role of the Eth2 Deposit Contract post-Merge

Question

As we all know, the withdrawals for Beacon Chain validators will only become available in a later hard fork post-Merge. Can anyone please explain in a little bit more detail or point me to an EIP or good reference on what kind of functionality will be introduced in this later hard fork? I assume it will enable additional functionality that the Beacon Chain does not have as of now (that's why we need a hard fork), but would really appreciate if a more thorough explaination could be provided.

Moreover, will the Eth2 Deposit Contract still play any role in the Beacon Chain once it becomes the default consensus layer for Ethereum, in which case after [Merge + withdrawals enabled] the ETH deposited in the contract will continue to vary as ETH is committed to activate validation software. However, will this contract, instead of having its ETH balance only increasing over time as in the pre-Merge era, eventually have its balance decreasing if the difference between deposits and withdrawal is negative within a time window.

Answer 1

The specifications for withdrawals are still being designed. They are subject to changes. Some of the technical details can be found on the Capella spec.

From my understanding, there will be 2 kinds of withdrawal: full and partial. Both will need a withdraw address. If you do not currently have a 0x01 withdraw credential, you will be able to use your withdrawal key (derived from your mnemonic) to change your withdraw credential to a 0x01 one with the withdraw address in it, the address you want to receive your ETH in.

For the full withdrawal, you will simply do a voluntary exit of your validator. It will be automatic from there. The withdraw address will receive everything on the validator balance including the initial deposit and all the accrued rewards.

For the partial withdrawal, it will be automatic every 1-2 weeks and will keep your validator balance at the maximum effective value (32 ETH) and withdraw the rest to the withdraw address.

The deposit contract will still be used to add new validators. I don't think there is a plan to change the way it works. Its balance will simply keep increasing.