The long-awaited Shanghai upgrade will enable users to withdraw staked ETH for the first time since The Merge.
Ethereum core developers have confirmed that the highly-anticipated Shanghai upgrade will now go live in the first two weeks of April, rather than mid-March.
The Shanghai hard fork will enable users to withdraw staked ETH, giving them long-awaited access to their assets.
Ethereum core developers agreed that the Goerli testnet – the final dress rehearsal for the Shanghai upgrade – will take place on March 14, with Shanghai to launch two weeks later.
Why is the Shanghai upgrade so important?
For many years, Ethereum was a proof-of-work blockchain that relied on energy-intensive crypto mining to validate transactions. In September 2022, the network underwent a radical shift to a proof-of-stake consensus, whereby users lock up (i.e. stake) their ether for a chance to be a validator, in turn receiving a profit.
Read more: A beginner’s guide to Ethereum | Blockchain Basics
The shift to proof-of-stake is widely known as The Merge, since it involved a merge between the Beacon Chain and the Ethereum Mainnet. The Shanghai upgrade is important because it’s the first major upgrade since the transition.
The Shanghai upgrade is a series of upgrades that allows users to unstake their ether. It will also unroll several other changes to the Ethereum network outlined on the Ethereum GitHub, including:
- EIP-3651: Warm COINBASE
- EIP-3855: PUSH0 instruction
- EIP-3860: Limit and meter initcode
- EIP-4895: Beacon Chain push withdrawals as operations
- EIP-6049: Deprecate SELFDESTRUCT
What can we expect after the upgrade?
According to Etherscan, roughly 17 million ETH (approximately $27,384,676,014) has been staked and accumulating rewards since The Merge. Ethereum validators also reached a record number of 500,000.
Many individuals are likely to want to unstake as soon as the update goes live, but there will be a cap of 43,200 ETH per day to maintain an optimum number of validators within the network. There will also be a waiting list structure whereby 16 partial withdrawals can take place in each 12-second slot.
It’s common to see a coin price hike after a successful network upgrade. (Similarly, it’s also common to see the inverse when an upgrade doesn’t go as planned.)
Additionally, in January, a JP Morgan analyst predicted that the upgrade could usher in a “new era” for Coinbase, estimating that staking could earn the exchange $225 million and $545 million in revenue per year.
Shanghai will be a major stepping stone toward sharding (EIP-4844) – a scalability solution that involves database partitioning.
