#Ethereum much-anticipated Shanghai hard fork, also known as Shapella, has been successfully completed, marking a significant milestone in the blockchain's multi-year transition to a full proof-of-stake network. The upgrade was triggered at 22:27 UTC and finalized about 15 minutes later, allowing users who have staked their ether (ETH) to secure and validate transactions on the blockchain to withdraw their holdings or redeem accrued rewards.
Proof-of-stake is a consensus mechanism where users stake cryptocurrency as a form of guarantee to help secure and confirm new data blocks. Ethereum had transitioned to this mechanism last year, but until now, users were unable to withdraw their staked ether or redeem rewards, a crucial feature of the new paradigm.
The successful implementation of the #Shanghai hard fork is a significant development for Ethereum, as it represents a major step towards making the blockchain more secure, efficient, and decentralized. However, there are still significant challenges ahead, particularly around scaling the network to make transactions faster and cheaper.
Vitalik Buterin, the co-founder of Ethereum, highlighted scaling as the next issue the blockchain will tackle after the successful implementation of the Shanghai hard fork. He emphasized that fixing scaling before the next bull run is essential to prevent users from paying high transaction fees, which could hinder the adoption of the platform.
The successful implementation of the Shanghai hard fork is also significant for validators who keep the blockchain running. Under the proof-of-stake consensus mechanism, validators have to stake at least 32 ETH by sending them to a smart contract where the funds are locked in. The more #ETH a validator stakes, the more likely they will be tasked with proposing a block of data transactions to be confirmed on the blockchain. When a validator proposes a block and it is approved by other validators, they receive an extra reward.
Not everyone has 32 ETH to stake, so liquid staking providers emerged as an alternative. These providers allow users to contribute any amount of ETH they want, and third-party providers will stake that ETH and run the validator on behalf of a collective of clients. The largest liquid staking provider, Lido, controls about 23% of all ETH staked, while some of the world's largest crypto exchanges, including Coinbase, Kraken, and #Binance control another 22% of staked ETH.
The successful implementation of the Shanghai hard fork represents a significant milestone for Ethereum, marking a crucial step towards a more secure, efficient, and decentralized blockchain. While there are still significant challenges ahead, particularly around scaling the network, the successful completion of the upgrade has boosted market sentiment and paved the way for further innovation and development in the world of decentralized finance.