Crypto’s Ethereum Blockchain completes its key Shanghai software upgrade

by Arthur · April 13, 2023

(Bloomberg) — The Ethereum blockchain, the main commercial highway in the digital asset sector, successfully implemented a long-awaited software upgrade.

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The so-called Shanghai Update allows investors to queue up to withdraw Ether coins that they have pledged to help run the network for rewards, a process called staking.

Tim Beiko, who helps coordinate the development of Ethereum, posted on Twitter on Wednesday that the upgrade is now “official.”

The network renewal – also known as Shapella – is designed to allow people to exit an Ether stake investment and has sparked debate over whether the appeal of the largest token after Bitcoin will increase over time.

“Ethereum is updating and navigating with great skill — so far anyway — solidifying its position as the No. 2 crypto,” said Aaron Brown, a crypto investor who writes for Bloomberg Opinion. He added that the network is “moving to the future much faster than Bitcoin.”

About 1.2 million Ether tokens — worth roughly $2.3 billion at current prices — are expected to be withdrawn over the next five days, according to researcher Coin Metrics. About $36.7 billion of Ether is unlocked for staking, data from Staking Rewards shows.

End queue

Crypto exchange Kraken dominated the first exit queue, based on numbers compiled by Rated Labs. Kraken will stop betting products in the US as part of a settlement with the Securities and Exchange Commission. The regulator alleged earlier this year that the firm’s betting service was an illegal sale of securities.

Investors were braced for swings in crypto prices around the upgrade, but digital asset markets were largely stable.

Ether was up less than 1% at $1,919 at 7:07 a.m. in London on Thursday. Smaller coins from applications that try to make it easier to exploit Ether rewards, such as LDO and RPL, were little changed in the past hour, according to CoinGecko data.

Last September, the Ethereum blockchain switched to a proof-of-stake from a proof-of-work approach, an innovation called the Merger that cut the network’s power consumption.

Proof-of-stake uses piles of Ether – placed in special so-called staking wallets – to help order transactions on the Ethereum network. Proof-of-work, the system used by Bitcoin, relies on power-hungry computers and has consequently come under fire for its environmental footprint.

–With assistance from Sidhartha Shukla.

(Updates from the seventh paragraph with excerpts from Kraken.)