- Ethereum scheduled the Shanghai upgrade to occur in March 2023.
- After the Shanghai upgrade, validators can withdraw their staked ETH and the rewards earned from having staked thus far.
- The upgrade could drive demand for Ethereum (ETH), as traders can unstake their ETH assets.
According to data from BeaconScan, the number of Ethereum (ETH) validators stands at 501,893 at the time of writing, driving anticipation for the upgrade to follow.
Ethereum core developers achieved the milestone in preparation for the Shanghai hard fork, which they tentatively scheduled to occur in March 2023.
The news comes after Ethereum developers released an update on January 9th, 2023. The statement confirmed that staking withdrawals would be implemented during the Shanghai upgrade without delays.
What Is the Shanghai Upgrade?
The Ethereum blockchain has relied on validators to keep it functional since it executed the merge on September 15th, 2022, moving the network from a Proof of Work (PoW) to a Proof of Stake (PoS) consensus mechanism.
To use validator software in Ethereum, an individual or organization must physically manage a validator client on the Beacon Chain and stake 32 ether. This amount is worth approximately $50,000 at current prices.
Staking is the process of holding a certain amount of cryptocurrency in a wallet for a specific period to earn a return on investment. On the Ethereum blockchain, this is commonly done with Ether via a validator node in the Proof of Stake consensus mechanism.
After the Shanghai upgrade, validators can withdraw their staked ETH and the rewards earned from having staked thus far. The withdrawal amount will be capped at 43,200 ETH per day out of the total staked ETH, worth approximately 16 million ETH. This is expected to prevent a sudden mass exit of validators.
On the Flipside
- ETH could see a further price increase due to favorable market conditions and the upcoming Shanghai upgrade.
- The Shanghai upgrade could decrease the number of validators on the Ethereum network. Holders may choose to withdraw their staked ETH and rewards earned.
Why You Should Care
The upcoming Shanghai upgrade will enable ETH withdrawals on the Beacon Chain. The upgrade could drive demand for ETH, especially as traders can unstake their ETH assets.
Read more about the Shanghai upgrade:
Ethereum Developers to Focus on Withdrawals of Staked Ether in the Shanghai Upgrade
Read more about the Ethereum merge:
The Merge: an Introduction to Ethereum’s PoW to PoS Transition