What is Ethereum Shanghai Upgrade?
The Ethereum Shangahi Upgrade is the first planned update to the Ethereum blockchain after The Merge in September 2022. This update aims to implement a number of EIP (Ethereum Improvement Proposal) proposals, primarily to enable validators to unlock the Ethereums (ETH) they have staked (deposited). In this article, you can find the answer to the question of what is Ethereum Shanghai Update.
What is Ethereum Shanghai Upgrade?
In December 2020, the Ethereum blockchain, the Beacon Chain, was released, the first step in the transition from the Proof of Work consensus algorithm to the Proof of Stake protocol. At this stage, while 2 different Ethereum blockchains (Ethereum 1.0 and Ethereum 2.0) started to work simultaneously, users were allowed to start proof-of-stake mining by staking a minimum of 32 ETH on the Ethereum 2.0 network, or in other words, to become a validator.
Staking on the Ethereum blockchain can also be referred to as depositing 32 ETH to activate the validator software. Staking assets on any blockchain means adding computing power to the network. In this way, the level of decentralization and security of the network increases. Specific to the Ethereum blockchain, validators are randomly selected from stakers to generate and validate blocks. Users selected as validators to create the next block receive transaction and network fees as a reward based on the amount of Ethereum they stake. On the other hand, users who do not have enough Ethereum to be a validator, liquidity pools, etc. By staking lower amounts of ETH to platforms, it can contribute to the verification process and the security of the network.
Beacon Chain, which is the consensus layer of Proof of Stake with The Merge (merger) that took place in September 2022, has been merged with the main Ethereum chain (mainnet) operating with the Proof of Work protocol, thus allowing the entire network to be Proof of Stake. switched to the protocol. Thus, instead of miners, Ethereum staking validators have been used to add blocks on the network. However, in this process, no application has been made to unlock-withdraw or, in technical terms, unstake the staked Ethereums.
Ethereum Shanghai Upgrade has stated that it aims to implement EIP-4895, which will allow Ethereum deposited or staked on the Beacon Chain since December 2020 to be unstacked. Besides EIP-4895, other Ethereum improvement proposals for lowering transaction fees, minimizing and optimizing smart contracts are also targeted to be implemented in the Ethereum Shanghai Update. Although the developers predict that the Ethereum Shanghai Upgrade will take place in March, they also state that there may be delays.
At the time of writing this article, there are over 515,000 validators on the Ethereum blockchain, and over 16 million Ethereum has been staked. With this in mind, the developers have set a limit to unstake to full validators in order to maintain the decentralization and security of the Ethereum blockchain. Accordingly, only 6 full validators are designed to unstake every 30,000 blocks. In other words, this figure corresponds to 1,350 full validators per day or an average of 43 thousand ETH per day. However, the developers state that this rate is not a fixed rate and will be updated periodically according to the amount of Ethereum staked.
