Ethereum Shanghai Upgrade – Web3’s next portrayal?
Ethereum is about to release its Shanghai Upgrade, and it can modify the Web3 industry. The latest update will allow ETH stakers to withdraw cryptocurrencies locked in the ETH smart contract.
Currently, this Beacon Deposit Contract boasts over 16 million ETH. The tokens are valued at 21 billion dollars, and users are worried about the potential selling pressure. Traders are worried that investors have locked their tokens for many years.
Most of them are eager to gain profits from yield and price increases. However, the latest report revealed that most of these accounts have only locked below 5,000 ETH. Investors are also worried that the Shanghai upgrade will open staking withdrawals, triggering selling pressure.
While this does not mean the investors won’t sell the ETH, the upgrade makes the chances less likely. Similarly, it is pivotal to notice that Ethereum might not allow withdrawals all at once.
Before The Merge, Ethereum used to operate on the PoW (proof-of-work) model. It needed massive processing power since miners needed to verify the PoW blockchains. This was done by solving math puzzles, and the winner needed to update the network with the latest blocks. They used to earn native tokens for the entire process.
As for the upgrade, the hard fork is fixed for March 2023. It will integrate EIP 4895, allowing validators to withdraw Ethereum that has been locked since 2020. With 14% of the overall ETH currently staked, the update involves over 26 billion dollars.
The fork has been designed to reduce costs aimed at ETH developers. Surprisingly, the fork excludes EIP 4844, which allows the sharding of Ethereum into multiple chains. Given the sheer scale of the update, Shanghai can be a major game changer for the industry.