The ‘Ethereum Shanghai Upgrade’ is Going Live in April 12, 2023: Everything You Need to Know
Key Takeaways:
- Ethereum Shanghai Upgrade right around the corner: The date is set for April 12, 10:27 pm (UTC), at epoch 194048.
- This is the biggest development to happen to the largest smart contract platform in the crypto industry since the Ethereum Merge that took place last year.
- In the latest news, just a day after the Shanghai Upgrade went live on the third and final Goerli testnet, the final date for the Shanghai Capella Upgrade on the Ethereum mainnet was announced at the #157 Ethereum ACDE (All Core Developers Execution) Call that happened on March 16.
- The date for the final execution of the Shanghai Upgrade on the Ethereum mainnet has been pushed back a month to April, thanks to delays during the Sepolia testnet execution but now has been finalized.
- The Shapella Upgrade went live on the third and final Goerli testnet early on March 15, Indian Standard Time.
Why is Ethereum Shanghai Upgrade Important?
Well, it is important due to several reasons and I will list them for you below. However, it must be noted that these are calculated assumptions made with the available data. We will keep this section updated as we get more information regarding the upgrade.
Gas fees: One of the biggest things that the Ethereum Shanghai Upgrade is expected to bring about is to reduce gas fees for layer-2 solutions running on top of Ethereum, for example, Polygon, Optimism, and the like. These Layer 2 solutions make using Ethereum faster and cheaper and this upgrade could potentially make it even cheaper to transact on the Ethereum blockchain.
Withdrawal of staked ETH tokens: So ahead of the Ethereum Merge, all those who were interested to become a validator in the new PoS Ethereum Beacon chain, had to stake a certain amount of ETH to a deposit smart contract which was locked in with the contract even after the Merge happened. But now with the Shanghai Upgrade, we may see the lock-in be released and those who had staked their ETH tokens may be able to unstake them.
Updates to smart contract facilities: This is another important update that can be expected out of the Shanghai Upgrade. Ethereum being the single largest smart contract-capable blockchain network has to stay ahead in terms of development.
How will Ethereum Shanghai Upgrade affect ETH prices?
Continuing from the above thought – if you are a trader or an investor in the ETH token, the story changes a little bit. While it cannot be said for certain, the implementation of EIP-4895 could have certain ramifications on the price of the token. This is because according to data from Staking Rewards, 14.09% of all eligible ETH tokens have been staked. Thus when staking withdrawals are opened up, this could amount to significant liquidity flooding back into the open market, putting some downward pressure on ETH prices. However, that is assuming that the entirety of the ETH tokens are immediately pulled out and sold off – which in retrospect seems highly unlikely. Thus, for traders and investors, keeping a vigilant eye on the percentage of ETH coins staked would be sound advice.
On the other hand, things could also move in the opposite direction as ETH could become more attractive to users due to its improved liquidity. Those who didn’t want to go via liquid staking protocols would now have a chance to directly stake ETH with Ethereum.
However, one overarching positive thing that can be taken out of this is that while locking up coins is a means to make the process more secure, it could be also looked at as a means of artificial control and thus a removal of that cap could bring about more balance and equilibrium in the market.
Event of the day, Upgrade will happen today around 6:30PM EST time
