The highly anticipated ‘Shanghai’ upgrade to the Ethereum blockchain is set to launch tomorrow, Wednesday 12th, and is poised to be a major market event of the year. This upgrade is particularly noteworthy as it will enable validators to withdraw their staked ETH for the first time since staking was introduced with the Beacon Chain’s debut in December 2020. This development marks a significant milestone for the Ethereum community and is expected to impact the market profoundly.
The new update to the Ethereum blockchain is a hard-fork, affectionately dubbed ‘Shapella.’ This moniker is a clever combination of ‘Shanghai,’ which alludes to the upgrade of the blockchain’s execution layer, and ‘Capella,’ which represents the parallel upgrade of its consensus client. This innovative update is set to elevate the Ethereum blockchain to new heights, and we are excited to witness its impact on the industry.
In a recent YouTube video by the esteemed crypto podcast Unchained, host Laura Shin engaged a panel of industry experts to weigh in on the significance of the highly anticipated update. Among the hotly debated topic of unlocking staked ETH, Christine Kim, VP of Research at Galaxy Digital, posited that this move represents a pivotal moment in Ethereum’s proof-of-stake mechanism, likening it to the removal of training wheels. However, she also noted that the impact on price might be insignificant, citing the coin’s daily trading volume. On the other hand, Andrew Thurman, Content Lead at Nansen, speculated that a successful upgrade could stimulate ETH depositing activity, thereby reducing supply and potentially boosting the price.
Shin and Kim emphasized that the upgrade’s overarching goal is scalability. Ethereum’s roadmap outlines a plan to shift the execution of smart contracts and user activity to layer 2 rollups, which can process and bundle user transactions more cost-effectively and efficiently than the current protocol. As per the Ethereum website, these rollups will significantly decrease gas fees, making Ethereum more inclusive and accessible to individuals worldwide.
