Ethereum’s long-awaited Shanghai upgrade kicked off at 5:27am this morning (April 13), with its native cryptocurrency ETH largely unchanged.
Validators can withdraw pledged ETH
Ethereum’s Shanghai upgrade introduces a major new feature that allows validators previously staked on-chain to withdraw ETH for the first time.
However, the Shanghai upgrade will not be able to flood the market with ETH. For the next 18 months, Ethereum will only allow 1,350 full validators to withdraw their ETH per day. Because each validator stakes 32 ETH, no more than 43,200 ETH enters the market per day ($83 million at current prices), and they are unlikely to withdraw all of their ETH.
According to data from Nansen170,689 ETH and 4,799 validators waiting for a full exit, less than 1% of ETH and staking participants.
Additionally, third-party staking platforms are running on their own schedules. For example, Lido has suggested that users will start withdrawing ETH around May.
Shanghai also includes other improvements, such as the ability to condition or cancel payments, features to reduce contract size and certain contract risks, and improvements to reduce developer gas fees.
The Shanghai upgrade was carried out concurrently with another upgrade called “Capella”, and the entire upgrade is sometimes collectively referred to as “Shapela”.
Shanghai is just one stage on Ethereum’s roadmap
Shanghai represented the most significant Ethereum development in months, an event that received a lot of attention. ConsenSys has launched a collection of commemorative NFTs, while their MetaMask wallet project offers user guides and warnings about scams.
Despite previous predictions, ETH prices saw only minor fluctuations during the event. ETH edged up, with its price up 0.2 percent in an hour and 1.3 percent in 24 hours. In comparison, bitcoin gained 0.009% and lost 1.14% over the same period.
ETH price chart | Source: Tradingview
Prior to this, Ethereum underwent another major upgrade called Merge. The upgrade takes place in September 2022 and sees Ethereum fully transition from Proof of Work (POW) (also known as mining) to Proof of Stake (POS).
Even though Merge represents a radical change to staking, validators were able to stake as early as November 2020.
Ethereum’s next major update is called Cancun. It will feature proto-danksharding, a feature designed to improve scalability by improving fees and transaction times.
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According to Cryptoslate