Ethereum Shanghai Upgrade Shanghai Fork The Merge Stakes Unlocks Blockchain Network

Following the successful completion of the Ethereum mainnet merger in September 2022, the Ethereum blockchain is expected to witness the Shanghai upgrade sometime in April this year. Among the crypto circle, the Shanghai upgrade is widely considered to be one of the most important events for the ETH community since the merger. In this article, we explain everything you need to know about the Ethereum Shanghai upgrade.

But before that, let’s understand the merger a little better.

What was the merger?

Last year, the merger took place when the Ethereum blockchain successfully made the transition from proof-of-work (PoW) to proof-of-stake (PoS).

The network went through a shift without any major hiccups, which led to hardware-based miners being replaced by validators staking Ethereum. They engaged in staking to ensure transaction processing and to help add blocks to maintain the network.

One of the significant changes in the merger was a drastic drop in electricity consumption. It helped Ethereum reduce energy utilization by nearly 99 percent, CoinTelegraph reported.

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What is Ethereum Shanghai Upgrade?

The Ethereum Shanghai Upgrade, also known as the ‘Ethereum Shanghai Fork’, is a series of changes and upgrades to the Ethereum blockchain network, scheduled to take place sometime in March or April this year. These major changes are believed to have decisive financial effects for customers, investors and the organization itself.

Around five Ethereum Improvement Proposals (EIPs) are expected to be introduced, with EIP-4895 set to be the most important. This is because the Ethereum Shanghai upgrade will help unlock the Ethereum staked to facilitate withdrawals. It is a big relief for the Ethereum community as the stake can be unlocked after two years.

However, there are other proposals in the Shanghai upgrade that concern the Ethereum Virtual Machine (EVM) and the Ethereum Object Format (EOF).

EVM is a software component that contains all the blockchains compatible with it. This has Ethereum Classic (ETC), which includes over 120 operation codes as it ensures decentralized programmability on the networks. The EOF is a group of proposals regarding improvements that have accumulated over the years. However, it forms a consistent and logical sound upgrade for the Ethereum Virtual Machine.

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What may change after the Ethereum Shanghai upgrade?

As mentioned earlier, the biggest effect of the upgrade will be seen by unlocking the bets. Over $17 million Ether remained staked until March of this year, following Ethereum’s Merge event. The upcoming upgrades will ensure full unlocking of these efforts.

Although customers can withdraw amounts, there will be a limit of ETH 43,200 per day. This also means that validators will not migrate on a large scale from the network.

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How Will Shanghai Fork Affect Ethereum Stakeholders?

Ethereum has a history of slow transactions with high fees. The recurring problems of slow transactions and high fees were seen more frequently after Decentralized Finance (DeFi) saw a boom, which subsequently caused an increase in Transactions Value Locking (TVL) in the chain.

In addition to that, the rise of non-fungible tokens (NFT) also led to not so good experiences for the users and stakeholders.

However, following planned Shanghai upgrades, transaction speeds are expected to increase and fees may be reduced. The changes can lead to better performance and flexible efforts for stakeholders.

How will it affect traders, investors?

Traders are expected to witness the price increase due to the Shanghai upgrade. The supply and demand of the product may see a significant change.

Primarily, more users will stay and come back after transaction fees are reduced. Ethereum has long been considered the “chain of the rich”. This notion and barrier will break after costs are reduced. As far as investors are concerned, it will be a risk-free trading and investment opportunity. This will happen as a result of Ethereum becoming the blue-chip asset in the cryptocurrency industry.

Disclaimer: Crypto products and NFTs are unregulated and can be very risky. There can be no regulatory recourse for losses from such transactions. Cryptocurrency is not legal tender and is subject to market risk. Readers are advised to seek expert advice and read the offer document(s) together with related important literature on the subject carefully before making any investment whatsoever. Cryptocurrency market predictions are speculative and any investment made shall be at the readers own cost and risk.