Ethereum Gets an Upgrade: What You Need to Know
Exploring the Potential Impacts of the Shanghai Upgrade
Hey, fellow finance enthusiasts!
Are you ready for the next big thing in the Ethereum world?
Get ready for the Shanghai Upgrade, set to take place in March this year. This upcoming network upgrade has the potential to take Ethereum to new heights and change the game for crypto investors.
But, what exactly is this upgrade, and how will it impact the Ethereum price?
Last September, the long-awaited merger of the Beacon Chain with Ethereum (The Merge) was finally accomplished, and it was a huge moment for the crypto community. This upgrade was highly anticipated for years and set the foundation for Ethereum 2.0 a fully scalable Layer1 blockchain for the Web3. Despite the switch to Proof of Stake (PoS) consensus algorithm, Ethereum still needs more scalability.
This is where the Shanghai Upgrade comes in. This upgrade will pave the way for introducing sharding, which will finally make Ethereum scalable. The Hard Fork is scheduled for mid-March and will allow Ethereum validators and investors to withdraw their staked Ethereum (ETH) from the Beacon Chain for the first time since its introduction in December 2020.
With around 16.4 million ETH, or approximately one-seventh of all Ethereum, currently locked on the Beacon Chain, worth a total of $26 billion, the Hard Fork has the potential to have massive implications for the entire Ethereum ecosystem and, ultimately, the price of ETH.
Get Ready to Unlock the Power of Ethereum’s Shanghai Upgrade!
The world of cryptocurrency and blockchain technology is constantly evolving, and the latest update from the Ethereum community is no exception. The Ethereum Shanghai Upgrade is a big step forward for the future of the Ethereum network, and it’s about to make a big impact.
At the heart of the Ethereum Shanghai Upgrade is EIP-4895, a proposal that will unlock the 16.4 million ETH that’s currently locked up on the Ethereum network. This move will allow investors to take control of their cryptocurrency assets and start earning staking rewards of up to 5% per year.
The Ethereum Shanghai Upgrade will also include three other improvement proposals (EIPs) that are designed to address some of the biggest challenges facing the Ethereum network. These proposals will help to improve the performance of the Ethereum network and reduce the cost of gas fees, making it easier and more affordable for investors to use the Ethereum network.
One of these proposals, EIP-3855, will help to address the issue of slow transaction times on the Ethereum network. EIP-3860 will help to reduce the cost of gas fees by optimizing the way the Ethereum network operates, and EIP-6049 will help to improve the overall performance of the Ethereum network.
Investors who have already locked up their ETH on the Beacon Chain have already seen a 165% increase in the value of their assets.
With the Ethereum Shanghai Upgrade, this is just the beginning.
The Beacon Chain has already attracted over 515,000 validators, and in March, these investors will finally be able to cash in their ETH and staking rewards.
How to Quickly Release ETH as a Validator?
As an Ethereum Validator, you have two options to unlock your locked ETH or staking rewards after the Shanghai Hard Fork from the Beacon Chain.
The first option is to set up an “withdrawal authorization” that automatically releases the accumulated staking rewards earned with the validator.
The second option is to fully exit the Beacon Chain and release all 32 ETH + rewards by voluntarily sending a message indicating that you want to withdraw from the blockchain.
How quickly you can withdraw ETH from the Beacon Chain depends on the number of investors who wish to withdraw. A total of 16 requests can be processed in one slot (every 12 seconds).
Lucas Outumuro, Research Director at crypto-analysis firm IntoTheBlock, has pointed out that a maximum of 43,000 ETH can be withdrawn from the Beacon Chain per day.
This means it would take more than a year to withdraw all 16.4 million ETH from the Beacon Chain. This mechanism prevents mass withdrawals and mitigates selling pressure.
Impact of ETH Release on Ethereum Price
Most analysts and crypto traders expect the Ethereum price, especially after the strong price increase in recent weeks, to react bearishly in the short term after the Shanghai upgrade. It would therefore not be a big surprise if the Ether price corrected by 15 to 25%.
Analysts justify this predicted drop by the fact that the amount of released ETH will exceed the normally traded amount of ETH per day, even if not all investors decide to release their ETH.
Furthermore, it could, similar to the merge upgrade in September, to some extent come to a “buy the rumor, sell the news” event.
Crypto trader Thomas Kralow has also pointed out that the deadline for tax returns in the US expires in April, so many ETH investors could realize their profits from Ethereum staking before then.
In the medium to long term, however, the upgrade should have a positive effect on the Ethereum price. After all, the Shanghai upgrade is the basis for the next important scaling upgrade called
“Proto-Danksharding” (EIP-4844)
Which is also planned for this year and implements the sharding technology on Ethereum.
“Shanghai Upgrade” Brings Ethereum 2.0 Closer to Reality
Investors and crypto enthusiasts alike have been eagerly awaiting the launch of Ethereum 2.0, the highly anticipated upgrade to the Ethereum network. And the good news is that the journey to Ethereum 2.0 just got one step closer with the “Shanghai Upgrade” set to take place in March.
So, why is the “Shanghai Upgrade” important for Ethereum’s future?
This upgrade is a crucial step towards the realization of the Ethereum 2.0 roadmap and necessary for enabling the next important scaling upgrade, “Proto-Danksharding”. This sharding upgrade is expected to roll out in the summer or fall of this year.
While the “Shanghai Upgrade” may cause temporary pressure on sales, in the medium to long term, it will have a more positive impact on the Ethereum network. Additionally, only a maximum of 43,000 ETH can be withdrawn from the Beacon Chain daily, so mass withdrawals after the upgrade are unlikely.
A recent report by Bernstein highlights the recent surge in on-chain activity on the Ethereum network. This can be largely attributed to the increased interest in NFTs on Ethereum (ETH), which has more than doubled daily blockchain fees from $2 million to $4–6 million in the last month.
The increased on-chain activity has also made Ethereum (ETH) deflationary again, as more ETH has been burned through fees than has been added through staking, this is a strong foundation for long-term rising prices.
In conclusion, the “Shanghai Upgrade” is a major milestone in the journey to Ethereum 2.0 and is poised to bring about a more scalable, efficient, and secure network.
Embrace the Opportunity and Make the Most Out of the ETH Dip!
I’m here to remind you that the crypto market is full of surprises and the Ethereum market is no exception. If we experience another dip in the ETH market, it’s easy to panic and sell off your holdings.
But what if I told you that this dip is an opportunity waiting to happen?
I see every dip as a chance to buy low and sell high. And I’m not alone in this thought process. In the crypto market, dips are as common as a Monday morning coffee.
So why not embrace this dip with open arms and increase your ETH portfolio?
Now, where do you trade your ETH during this dip? Well, you have a few options. You can trade on popular exchanges such as Bitpanda (EU), Binance (EU & US), and Coinbase (EU & US). And don’t forget to set price alarms so you don’t miss out on the opportunity to buy low.
But that’s not all. I want to invite you to join me in making the most out of this dip. Share this article with your friends and let them know that this dip is a chance to increase their ETH holdings. And while you’re at it, show me some love by clapping for this article on Medium, and follow me for more insights on Twitter.
I invite you to turn this dip into a winning opportunity. Get ready to trade, set those price alarms, and join me in making the most out of this ETH dip.
Get ready to witness history in the making! And as always…
Happy Investing!
