Ethereum: The long-awaited Shanghai upgrade will be available on April 12th

On April 12th, Ethereum, the second-largest cryptocurrency by market capitalization, will receive a significant update. Shanghai will provide significant improvements to the Ethereum network.

As it is usually said, the Shanghai update is only second to The Merge in terms of switching from PoW to the Proof-of-Stake (PoS) consensus mechanism. A future upgrade will enable users to withdraw ETH from the Beacon Chain deposit contract, as well as make some system enhancements. In this post, we’ll go through the specifics of the upgrade.

Shanghai details

Shanghai is the Ethereum network’s next upgrade, scheduled on April 12, 2023. Developers will unlock the coins that users have been depositing since 2020 as part of the update. However, the transition will be gradual.

There are two withdrawal options:

• Partial, referring to assets on a balance of more than 32 ETH. In this case, the validator remains in the Beacon Chain and participates in the consensus mechanism.
• Full. When the validator leaves the network and ceases to be a member. The complete balance (32 ETH and prizes) is now available.

According to Ethereum.org, the validator joins the withdrawal queue in the second option. In turn, it is determined by the total number of network participants. Logically, the larger it is, the more people will be able to withdraw all of their assets in a single period.

What effect will the upgrade have on the price of ETH?

Some members of the community are concerned about the possible price pressure on ETH after the update. Others believe that the upgrade may harm tokens of liquid staking services like Lido and the market as a whole.

However, the crypto community as a whole is upbeat about Ethereum’s prospects following the Shanghai upgrade. Staking and TVL gains, along with rising utility token prices, are driving the growth of total asset value in services like Lido and Rocket Pool.

Furthermore, the withdrawal following the update will be dynamic, depending on the circumstances. So it seems quite doubtful that a large portion of ETH would suddenly leave the market.

What shall we wait for after the Shanghai update?

The Shanghai upgrade is the next stage for developers to increase the overall network’s scalability. According to previously published intentions, there will be other major changes in 2023, including sharding. As you may know, it is designed to split the Ethereum network and substantially boost the ecosystem’s scalability potential.

According to JP Morgan, the Shanghai upgrade will increase income for Ethereum-staking service provider platforms. Also, ETH is gaining momentum in anticipation of its advancement.

In conclusion, the Shanghai upgrade will include a vital feature for Ethereum stakers and anyone wanting to contribute assets to the staking network. Together with the Ethereum merge, this is one of the most anticipated improvements that will supplement the Proof of Stake algorithm. While it is hard to estimate the market impact of the upgrade, all ETH traders should pay special attention to its features and developments.