The Ethereum Shanghai Upgrade: What You Need to Know
Ethereum will undergo its first network upgrade following the merge onto a proof of stake consensus mechanism in September 2022. The new release is called the Shanghai upgrade, and it’s happening in mid-April 2023. Validators who had at least 32 ETH staked on the network will finally be allowed to withdraw their staked ETH following this upgrade.
When is the Shanghai upgrade on Ethereum?
The Ethereum Shanghai upgrade will happen on April 12, 2023. This is the first major upgrade to the Ethereum blockchain network following the switch to a proof of stake consensus mechanism in September 2022. That major change to the popular cryptocurrency’s underlying architecture was dubbed “the merge” and it was many years in the making.
The Shanghai Ethereum upgrade was forecast to be a minor update to the network’s infrastructure, but it has some significance to crypto investors, particularly those who have been staking ETH on the network since the merge.
What is the Ethereum Shanghai upgrade?
The Shanghai upgrade for Ethereum is a hard fork on the Ethereum network. This fork on the network is like a fork in a road, except that there’s no turning back from a hard fork. After the Shanghai upgrade on Ethereum, the old, or non-upgraded, version of the blockchain network won’t be compatible with the new version.
Validators who have staked ETH on the network will finally be allowed to withdraw funds, marking the most significant change coming to the Ethereum network with the Shanghai upgrade. All staked ETH on the blockchain network was locked following the merge from proof of work to proof of stake in September 2022. The merge was a hugely significant upgrade to the Ethereum network – maybe the biggest in the history of blockchain technology.
“The Shanghai Upgrade is a relatively small upgrade, especially when compared to the merge this past fall,” says CoinFlip CEO Ben Weiss.
“However, there are a handful of additional improvements in this release that will make it easier and cheaper for developers to deploy and run smart contracts, which will help drive utilization in the network up over time.”
What does the upgrade mean for people who are staking Ethereum?
One of the most anticipated changes coming along with the Shanghai Ethereum upgrade is the unlocking of staked ETH. Investors who had staked their ETH couldn’t withdraw any of it from the network following the pivotal merge to proof of stake – at least not until the next scheduled upgrade was in the books. Part of the reason that ETH remained locked on the network was to prevent a flood of withdrawals immediately after the merge onto proof of stake.
The proof of stake consensus mechanism relies on individuals or groups of investors staking their crypto, essentially putting their holdings up as collateral, and in exchange, they can become a validator on the network. Validators sign off on transactions on the network, earn rewards on their staked crypto, and play a pivotal role in the proof of stake ecosystem. The Ethereum network required validators to put up at least 32 ETH ($61K in value at the time of this writing) to become validators.
The 32 ETH required to serve as a validator on the Ethereum network will be lowered following the Shanghai upgrade. This lower barrier to entry for serving as a validator, along with the unlocking of all the staked ETH, is expected to counter major outflows from the network and help boost liquidity for the Ethereum ecosystem in the near term.
What does the Shanghai upgrade mean for the price of Ethereum?
The network has proven that it's stable following the proof of stake switch and ETH has become a deflationary asset as well. The Ethereum network’s post-merge architecture "burns" ETH charged as a transaction fee, gradually drawing down the total amount of ETH in circulation. This is a way for the world’s second-largest cryptocurrency by market cap to insulate itself from price decreases due to an oversupply of ETH.
The network will continue rolling out scheduled upgrades that will help Ethereum get more efficient and more scalable in the future, offering faster transaction speeds and more smart contract applications. These beneficial features may lead to higher prices for ETH down the road. Right now, it’s too soon to tell. But the network has remained resilient following the most major upgrade of 2022, so developers and investors both have a positive outlook for the Shanghai upgrade.
How to buy Ethereum after the Shanghai upgrade?
Ethereum tokens will still be available to buy on most major crypto exchanges following the Shanghai upgrade. And the CoinFlip ATM near you is a great option for those investors who want to buy ETH with cash. The CoinFlip Order Desk can also help investors buy or sell ETH following the latest upgrade to the Ethereum network.
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