What will ETH Shanghai Upgrade bring to us?
At the Ethereum Core Devs Meeting #151 held on December 8, the Ethereum Core Devs Team announced that March 2023 would be the launching date for the Ethereum Network Shanghai permanent divergence. Through this Shanghai upgrade, the Ethereum network will completely transition to the Proof of Stake (PoS), and the centralized issues caused by The Merge will probably be effectively solved.
What is ETH Shanghai Upgrade?
With continuous divergence and upgrading, Ethereum finally ushered in Shanghai Upgrade. This upgrade will introduce the fundamental changes of EVM functions in the nearly complete ETH 2.0.
As Tim Beiko, the developer of Ethereum, said, Shanghai Upgrade will solve three key problems surrounding Ethereum, including elemental changes to Ethereum in the blockchain’s EVM functionalities, withdrawal of staked ETH on Beacon Chain, and Gas Fees reduction on Layer-2.
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Shanghai Upgrade will officially introduce EIP 3540, also known as EOF (EVM Object Format). The core change of this EIP is the separation of code and data. This may be beneficial to the validators on ETH network. In addition, EIP 3540 also brings a new smart contract part, which helps optimize processing and solve complex functional modules, such as account abstraction and control flow in EVM.
Shanghai Upgrade will also provide a solution to the withdrawal of staked ETH on Beacon Chain. Currently, users who staked ETH on Beacon Chain before cannot withdraw their ETH back, which will be solved through Shanghai Upgrade.
Moreover, Ethereum Shanghai Upgrade will optimize the most concerning issue in the ETH community, the Gas Fees issue. Shanghai Upgrade will reduce the Gas Fees on the Ethereum network by equalizing the block size and adding the CALLDATA function of the block.
Why is ETH Shanghai Upgrade so important?
ETH Shanghai Upgrade will be an important milestone on the Ethereum roadmap:
Gas Fees Reduction: One of the expected impacts of Shanghai Upgrade is to reduce Gas Fees for Layer-2 solutions running on top of the Ethereum blockchain, such as Polygon and Optimism. These similar Layer-2 solutions have, to some extent, made Ethereum faster and cheaper, and Shanghai Upgrade will further optimize the Gas Fees of transactions on Ethereum.
Withdrawal of Staked ETH: Ahead of The Merger of Ethereum, all those who were interested in becoming validators of the ETH 2.0 network must stake a certain amount of ETH to the smart contract. These staked ETHs are still locked in the contract after The Merge. However, after Shanghai Upgrade, the locked ETH will be released, and those who staked before will be able to gradually unstake their ETH from the Beacon Chain abiding by certain rules.
Updates to Smart Contract facilities: This is another important update that can be expected in Shanghai Upgrade. Ethereum is the largest blockchain network supporting smart contracts. Shanghai Upgrade will maintain ETH’s leading position in this area by introducing EOF (EVM Object Format).
As far as the ETH price in the future is concerned, Shanghai Upgrade will help accelerate the transactions on top of Ethereum. In addition, the upgrade will also simplify the process of processing ETH transactions through Layer-2 solutions such as Arbitrum and Optimism, which will help ETH obtain more mainstream adoption and application scenarios.
According to Vitalik Buterin, Layer-2 solutions on Ethereum are already indispensable parts of the Ethereum blockchain and play important roles in maintaining the affordability and cost-effectiveness of the network.
In general, Shanghai Upgrade is crucial to the future of Ethereum and ETH price. As the fully defined ETH roadmap has been released, investors will be very optimistic that ETH will soon break through its existing price.
How can we, general users, get involved in Shanghai Upgrade?
After The Merge, all transactions on the Ethereum network will no longer be verified by energy-intensive [Miners], but by [Validators] of individuals or institutions that have deposited or staked a large number of ETHs. Anyone could stake 32 ETHs or more to meet the minimum requirement to become a validator.
With the EIP 1559 proved in London Upgrade, users or processes which want to be packaged first can choose to pay a [Priority Fee] to the validating nodes to obtain faster and more priority packaging opportunities. Under this structure, the APR of Ethereum validators increased from 3% to nearly 7–8%.
In addition, as mentioned above, after Shanghai Upgrade, the staked ETH on the Beacon Chain will be released, which will undoubtedly greatly increase the appeal of ETH.
Therefore, being the validators of the ETH2.0 network may be the best choice to participate in ETH2.0 ecology after Shanghai Upgrade. However, 32 ETHs, as well as the technical work involving mev-boost and other frequent maintenance, are not easy for general users to access. Therefore, except for a few whales and technology geeks, joining the Mining Pools is the mainstream solution.
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