Ethereum Shanghai Upgrade: Here’s What You Need To Know

Blockonomi

It’s impossible now to go a day without running into the stories of the FTX saga and a series of speeches from Sam Bankman-Fried. The damage was huge.

But these setbacks aren’t stopping the growth of some top projects. The Ethereum team is still on track to approach its next scheduled upgrade, the Shanghai Upgrade.

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Shanghai Upgrade Coming In March

AllCoreDevs Meeting, a periodic call of Ethereum’s developer team, revealed new updates on December 8 with the Shanghai upgrade as the object of focus.

Shanghai is Ethereum’s next major update after the renowned transition from Proof-of-Work to Proof-of-Stake consensus in September.

In October, the developers released Shandong testnet as part of the plan to prepare for the upgrade. The coming Shanghai, which is set to launch at some point in 2023, will enable the withdrawal of staked ETH and make additional minor improvements, as noted by the team previously.

The highlight of the Shanghai upgrade is the EIP-4895 proposal, allowing those who have participated in staking ETH into the Ethereum 2.0 contract to withdraw funds and staking rewards.

Previously, the developers planned to implement a set of proposals – EVM Object Format (EOF) – including EIP-3540, EIP-3670, EIP-4200, EIP-4570, and EIP-5450 to the major upgrade.

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However, they eventually confirmed that if the EOF evaluation process takes too long, they are ready to postpone this upgrade to the fall of 2023 to avoid delaying the ETH staking unlocking schedule.

The core developers, however, decided in the latest meeting that they will put ETH unloading ahead of Ethereum Improvement Proposals (EIP)-4884.

Shanghai could give investors their first opportunity to unload their ETH, some of which have been staked since 2020. After two years, the amount locked is over 15.5 million ETH, worth around $19 billion.

EIP-4844, the proto-darksharking, is also another important hard fork on the blockchain. The hard fork will shard data on the blockchain for faster processing and increase the number of transactions that can be processed in a second.

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In a nutshell, two major hard forks will be split into two different terms instead of being put together as the original plan. Also, unlocking the staked ETH has been tentatively scheduled for March 2023.

However, some comments in the crypto community believe that the March 2023 timeline to unlock ETH staking is too optimistic because many technical aspects need to be supported and Ethereum in the future.

There has been a history of delaying The Merge-related upgrades because of unexpected issues, but this one looks like its on track.

Scalability Is The Next Goal

The primary objective of Shanghai and any following improvements is to enhance the scalability and performance of ETH.

At this time, anyone who invests ETH in order to take part in the PoS validation process will not be able to immediately withdraw the monies staked or the incentives received; rather, they will be required to employ derivatives that represent the assets that were made as bets.

In a separate post, Vitalik Buterin, the founder of Ethereum, explained that sharding is the future of Ethereum’s scalability.

This will help the ecosystem to support thousands of transactions per second and will enable the majority of the world to use the platform regularly at a cost that is affordable to them.

Buterin also mentioned, while speaking at Converge in September, that the cost of an Ethereum transaction reached at least $5 before the cryptocurrency economy tanked.

As a result of this hefty charge, consumers choose to trade cryptocurrencies through exchanges as transactions are cheaper and faster compared to trading directly on the blockchain.

Sharding is expected to enhance the data processing capacity of the system, cut the prices of transactions, and make the original blockchain more attractive to consumers.

Buterin has stated that this is Ethereum’s top goal following the transition to Proof-of-Stake with the release of The Merge update.

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Author: Nicholas Say


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