The Ethereum Shanghai upgrade went live on Apr. 12. This marks a major milestone reached by the network as this upgrade was highly-anticipated. Now, after the upgrade, people can withdraw their previously staked Ethereum for the first time in the network’s history. For your information, over $34.5 billion in ETH was unlocked after the Shanghai upgrade. This means higher liquidity, but it can also mean a higher number of sales. While the upgrade has yet to trigger a sell-off that could affect the market, some speculate that this might happen in the upcoming days. Despite concerns, the implementation brings significant technological improvements to the network.
Ethereum proof-of-stake chain has upgraded to Shapella. Withdrawal is now enabled 🎉
This closes the loop of the original beacon chain design. Validator can deposit -> withdrawal.
— terence.eth (@terencechain) April 12, 2023
The Shanghai upgrade marks the final step in Ethereum’s transition to a Proof-of-Stake (PoS) mechanism. From its debut until last year, Ethereum was a Proof-of-Work (PoW) network. As you may know, you could mine Ethereum using Ethereum miners or supercomputers. Through this mining network, the Ethereum blockchain was secured and transactions were processed. Now, however, Ethereum moved to a completely PoS consensus mechanism. The PoS model is a more energy-efficient method for verifying cryptocurrency transactions. Unlike PoW, PoS only uses validators selected randomly through the amount of staked ETH. The primary focus of the two-part network upgrade, the Shanghai and Shapella updates, is allowing users to withdraw their staked ETH.
According to the Ethereum Foundation, the Shanghai upgrade allows staked ETH to be deposited into wallets and exchanges. This effectively ends the lock-up period and unstakes the ETH. This enables users to stake their own ETH, access more staking options, and unstake their ETH when they need to. The simultaneous Shapella update has also been successfully implemented. This one was required for the Shanghai upgrade to go live. Now that both upgrades have gone live, the Ethereum network has fully migrated to a PoS mechanism.
Ethereum’s New Approach to Staking
Ethereum Foundation has highlighted its approach to staking several times until today. However, the last upgrade was just confirmation that the network is moving towards a better future. Their new approach to staking makes it easier for users to stake and unstake ETH based on how much they want to stake or unstake. Initially, however, the Ethereum network has set a limit on how many withdrawals will be processed in a single block. The current capacity is 115,200 validator withdrawals per day. If we go by these numbers, it would take 9 days for 1 million withdrawals to be completed.