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  • RRUPDATES📍: Ethereum Went To Shanghai. What’s The Fuss All About?

RRUPDATES📍: Ethereum Went To Shanghai. What’s The Fuss All About?

Ethereum Has Landed In Shanghai

RRUPDATES📍: Ethereum Went To Shanghai. What’s The Fuss All About?

A Historical Milestone: Ethereum Completes Shanghai Upgrade

At 22:27 UTC on April 12, 4000 people tuned in to a Shapella Mainnet Watch Party hosted by Ethereum Cat Herders to see how Ethereum accomplished the so-called “Shapella” or Shanghai upgrade. This hard fork was completed at 22:42 UTC.

The upgrade enabled a crucial feature, allowing validators who had previously staked ETH on-chain to withdraw those tokens for the first time.

According to beaconcha.in approximately half an hour after the upgrade, about 258 withdrawals in epoch 194,408 were processed for about 5,413 ETH ($10 million worth).

The Long-Awaited Hard Fork🍴

It is understandable why members of the Ethereum community call this upgrade a significant historical milestone when we consider that In a proof-of-stake system, users “stake” cryptocurrency as a form of guarantee to help secure and confirm new data blocks.

Despite being more environmentally friendly, PoS depended on Ethereum’s staking process. As a result, to participate in the consensus mechanism, ETH holders needed to stake at least 32 ETH.

To help secure the mechanism, validators have staked approximately 18 million ETH. Validators who stake 32 ETH in the chain can now participate in validating blocks after the Merge, and each staked ETH increases the likelihood of a validator receiving block rewards.

Although the Merge occurred in 2022, validators have been staking ETH since December 2020. The Beacon Chain, which used proof-of-stake as a mechanism, was released around this time.

Until now, users could not withdraw their staked ether or redeem accrued rewards.

Partial Withdrawals & Full Withdrawals🌓

Over 18 million ETH (roughly 15% of the total ETH supply) has been staked. Now that Shanghai is running, approximately 1.1 million ETH in rewards can be withdrawn immediately.

Even though the upgrade is done, validators will have to wait a while to access the ETH they want to unstake because the blockchain only has a single queue for full and partial withdrawals.

Only 16 partial withdrawals are permitted in each slot (which occurs every 12 seconds).

Full withdrawals operate differently than partial withdrawals. They enable validators to completely unstake their 32 ETH and any accumulated rewards. By leaving the chain, the validator ceases to participate in the block validation process and thus stops to contribute to the network’s security.

Full withdrawals are more complicated and do not occur automatically; thus, validators who wish to withdraw must first send a message to the blockchain to be added to the queue.

During the live stream of a Shapella Mainnet Watch Party, Vitalik Buterin, the Ethereum blockchain co-founder, said,

“We’re in a stage where the hardest and fastest parts of the Ethereum protocol’s transition are basically over. Very significant things still need to be done, but those very significant things can be safely done at a slower pace.”

Vitalik Buterin, Ethereum Co-Founder

Buterin stated that after Shanghai, the blockchain would focus on scaling and making transactions faster and cheaper:

“If we don’t fix scaling before the next bull run, we know people are going to be stuck paying $500 transactions. If, on the other hand, we don’t have Verkle Trees before the next bull run, well, things might suck, but you know, it’s a much smaller problem than, you know, $500 transactions, right?”

Vitalik Buterin, Ethereum Co-Founder

At the time of the Shanghai hard fork, the price of ETH remained unchanged until later breaking $2,000 for the first time since August 2022.

Changes Included In The Shanghai Upgrade🇨🇳

The upgrade enables validators to:

  • Unlock and withdraw their staking rewards.

  • Unstake ETH and gain access to their entire balance.

  • Earn rewards that will be distributed automatically.

  • Re-stake to sign back up and start earning more rewards.

Three additional improvement proposals for the Shanghai upgrade will address high gas fees, slow transaction processing time, and overall network performance.

In addition to EIP-4895, several other EIPs in the Shanghai fork aim to reduce gas costs for Ethereum developers.

As a reminder, this is not a trading signal or investment advice; it is an opinion, and each trader/investor should know and understand the risks of trading cryptocurrencies.

This should not be regarded as financial advice; feel free to familiarise yourself with our NFA disclaimer.


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