The second largest cryptocurrency by market cap and one of the most undervalued projects, according to many analysts, Ethereum, is ready for another update: The Ethereum Shanghai upgrade.
The Ethereum Shanghai testnet went live on February 1st and gave users a first hand opportunity to test out ETH withdrawals. The upgrade is set to be released by March and has excited all the stakers about it.
What is the Ethereum Shanghai Upgrade?
The Ethereum Shanghai upgrade aims to specifically improve the Ethereum Virtual Machine (EVM). The Ethereum Shanghai Upgrade will enable stakers withdraw their staked ETH, and the full proof-of-stake blockchain will finally come to life! Users will have sole control over their funds and decide what they wish to do with their rewards.
How to unstake Ethereum after the Ethereum Shanghai Upgrade?
If you’re running a validator:
There are two ways for you to unstake your ETH once the update is live.
1) by setting up a “withdrawal credential,” which automatically unstakes the accrued rewards you’ve earned from your validator.
2) is by completely exiting the Beacon Chain and unstaking all 32 ETH, then having your validator voluntarily send a message saying it will remove itself from the blockchain.
However, a part of this also depends on “how many people will unstake at a time,” according to a dev, Marius Van Der Wijden, at the Ethereum Foundation. Only 16 partial withdrawal requests can be put into a slot (which happens every 12 seconds), and there will be a single queue for both full and partial withdrawals on the blockchain. However, the likelihood of all validators choosing to exit the blockchain is slim, especially since the staking will open up a new door for Ethereum.
What is EIP-4895 And How Much Ethereum Has Been Staked?
EIP stands for Ethereum Improvement Proposal, and EIP-4895 indicates the Shanghai update. The proposal will allow validators to withdraw ~16 million ETH, which has been “staked” to secure the Ethereum network.
When Ethereum moved from a Proof-of-Work (PoW) system to Proof-of-Stake (Pos) in its latest update, the Merge, the network used validators instead of miners to add blocks to the blockchain.
What will the Ethereum Shanghai Update do for Retail?
While we don’t know the future of Ethereum, it’s moving in the right direction. 14.17% of all ETH tokens are staked, according to Staking Rewards. The withdrawal will certainly open a large pool of liquidity, and owners will now have the ability to withdraw and sell their staked holdings.
The update will also be situational, depending on whether you’ve staked ETH via Ethereum or a staking product like LIDO. However, the upgrade does suggest that staking ETH will be more attractive to users, especially with the improved liquidity. Users who didn’t want to use liquid staking protocols can now stake ETH directly with Ethereum.
This change can increase demand for ETH due to its improved staking conditions.
The Shanghai Update is a crucial feature for Ethereum stakers and those looking to stake. It is one of the most-anticipated features for users that have been waiting to participate in the fully-functional Proof-of-Stake mechanism. However, the potential effects that it will have on the price of Ethereum will still be unknown, but we can assure you one thing, and it is that Ethereum is holding up to its promises.
The Zhejiang public testnet is going live tomorrow (1st of Feb 15:00 UTC, 2023). Shanghai+Capella will be triggered 6 days later (at epoch 1350). You will be able to deposit validators, practice BLS change and exit without risk. All links are here: https://t.co/XNlsDIG0cm pic.twitter.com/sKKDJmolt2
— Barnabas Busa (@BarnabasBusa) January 31, 2023
I mean, just look at how deflationary ETH has been! How can you not be excited about its potential!