The Shanghai upgrade for Ethereum is currently targeted for this March. This will enable staking withdrawals for the first time since people began staking their ETH in 2020. Unlike other PoS networks like Cosmos, with a fixed withdrawal period for stakers, set at 21 days, Ethereum’s is dynamic based on how many validators are exiting at a given time.
So, how does the Shanghai upgrade come into play?
The Ethereum’s Overview
The Ethereum network is scalable, programmable, and decentralized. For many investors, it is the blockchain of choice.
Ethereum started with a proof of work (PoW) mechanism. Later, it began its journey toward proof of stake (PoS) with the launch of the Beacon Chain in December 2020. Later on, the Ethereum Merge happened after a series of testnet checks, making the Ethereum network a PoS one.
Staking, for many investors, is a crucial way of making money as it helps put assets to work and earn passive income without selling assets. However, in the Ethereum network, one issue still was hectic; cost. This is because the minimum amount required for staking to join the Beacon Chain was 32 ETH.
As a result, a series of projects began working on a more accessible way to stake on Ethereum, dubbed liquid staking.
The Shanghai Upgrade
The Shanghai upgrade is likely one of the most significant events for the Ethereum blockchain. Currently planned for the first half of 2023, the upgrade is set to bring several improvements to Ethereum.
Shanghai comprises of several upgrades, but the most impactful one allows ETH stakers to remove their staked ETH and the rewards accrued.
This change is established in the EIP-4895 proposal.
Several other proposals related to the Ethereum Virtual Machine (EVM) Object Format (EOF). This software component of all EVM-compatible chains contains more than 120 operation codes that give decentralized programmability to the networks.
However, one of the proposals that will not be present in the March 2023 release is EIP-4844. The proposal introduces proto-danksharding and sets up the highly anticipated sharding upgrade due in 2024 for the Ethereum network.
The most likely advantage of the upgrade is the spur it brings on the case of innovations regarding direct staking and liquid staking solutions. Additionally, it will bring on ETH’s position on the table as a staking protocol.
There are preparations already set for the upgrade. The most visible is Metamask integrating Lido and Rocket Pool, some of the most popular liquid-staking options. Once the Shanghai upgrade is complete, this will enable their users to stake ETH directly from their Metamask wallets.
The Shanghai upgrade is an essential milestone in Ethereum’s ongoing evolution. As the network continues to grow, we can be sure to expect even more exciting developments in the future.
Vincent Munene is a freelance writer and a great blockchain enthusiast. Blockchain has changed his life in terms of financial freedom and in return, he likes to educate people and keep them up to date on everything blockchain. He is a Biochemist by profession and also loves to play the piano.