Etherium developers have promised to release a “Shanghai” update by the end of March. Why is this important?
The next major update to Etherium, called Shanghai, is due to be released by the end of March this year, the cryptocurrency’s developers confirmed the day before. As a reminder, the Shanghai upgrade is particularly important in that it will allow validators to withdraw their ETH from the deposit smart contract. Also in the week, the Etherium team launched what is known as devnet 2. This is a dedicated devnet that will allow the blockchain’s customer teams to tweak the ETH withdrawal process and make sure they’ve done everything right. The launch of the network went mostly smoothly – albeit with a few expected hiccups. We tell you more about the news.
Note that the recent rise in the cryptocurrency market has had a good effect on Etherium. As rates have risen, users have taken to using coins and using Eth’s resources. Well, mass demand has traditionally led to higher commissions and more burn. As a result, as of now, the cryptocurrency is deflationary, as there have been more burns than issues on the network since it switched to Proof-of-Stake in September 2022.
The cryptocurrency’s net change in supply is now almost -21 ETH.
Etherium supply change since September 2022
Along with this, the number of active validators on the blockchain has surpassed the 500,000-unit mark.
Data on the Etherium validators
When will Etherium be updated
To recap, the previous major refresh of Etherium was the merger or so-called The Merge, which took place last September. It marked the official transition of Ether to the Proof-of-Stake (PoS) consensus algorithm. At the same time, the role of Etherium miners began to be fulfilled by validators, and in order to obtain such a role, a user must meet an important condition – to deposit 32 ETH into a cryptocurrency smart contract, that is, to participate in the stacking process.
It should be noted that depositing 32 ETH or another amount multiple of 32 is required in case of launching one's own validator node. If you wish, you can also join platforms that allow you to invest any amount - including very small amounts - in staking. These platforms work on a pooling basis, i.e., they pool users' coins and then send them to the stacker. The most popular platform among such platforms is Lido.
Etherium deposit smart contract statistics
In other words, it is possible to earn from stacking even without having 32 ETH. We wrote more about more affordable alternatives to earn from steaking in this article.
According to Decrypt’s sources, over 16 million ETH worth over $24 million has been collected in the deposit smart contract to date. Immediately after the merger, it was reported online that the ability to withdraw funds from the smart contract had allegedly been indefinitely delayed. This led to local panic within the community, but fortunately the news about Shanghai put everything in its place.
Etherium exchange rate over the past two weeks
Shanghai should initially have other important upgrades – including proto-danksharding, an optimised data sampling process that would have made transactions in tier two networks based on Etherium cheaper and faster. However, this particular upgrade has so far been abandoned, which means the developers’ priority now is to give validators the ability to withdraw their ETH.
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The week before last, developers also made the difficult decision to further delay EOF upgrades to Ethereum Virtual Machine (EVM), the mechanism at the heart of Etherium that enables the deployment of smart contracts. There have been no EVM upgrades for more than two years, as they were abandoned for the time being before the merger so as not to complicate the already confusing process of moving to Proof-of-Stake.
According to developer Marius Van Der Weyden, all these concessions have brought Shanghai’s release much closer. They may also have made the upgrade much more stable in the long run. Here’s a cue from an expert.
Things are going well. At the moment, I have no information about any issues that would cause Shanghai’s release to be delayed.
The developers are also planning to launch a public testnet of Shanghai by early February, which will allow validators and platforms to stress-test before the release of the upgrade.
As a reminder, this arrangement is standard for major updates to Etherium. First, the update is run on several test networks, which allows developers to look for possible bugs and make changes if necessary. Then, after testing, the update reaches the mainnet, i.e. the main Eth chain.
In anticipation of the successful implementation of smart contract deposit withdrawals, the tokens of centralised stacking platforms have jumped significantly in value. Lido Finance (LDO), for example, rose 34 per cent in a week.
LDO exchange rate in the last two weeks
We believe that the emergence of the ability to withdraw ethers from staking will have a good impact on cryptocurrency and blockchain security. First of all, the coin market is in a bearish trend right now, which means there is little point in getting rid of the withdrawn ETH. Also, the coin withdrawal feature will make the whole process more predictable, making more people likely to want to join the initiative. An additional reason to start staking may be that this activity is not considered a taxable event in many countries, as it does not involve exchanging tokens with each other. Accordingly, this source of revenue also does not bring headaches at the end of the reporting period.
What do you think about it? Share your opinion in our Millionaire Crypto Chat. There we discuss the outlook for Etherium and other important developments affecting the crypto world.
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