The Ethereum blockchain is set to undergo a significant upgrade called the Shanghai upgrade or Shapella upgrade on April 12, 2023. This upgrade includes several improvements to the network, including the implementation of two Ethereum Improvement Proposals (EIPs) known as Shanghai and Capella.
One of the main benefits of the Shanghai upgrade is a reduction in gas fees for developers on the Ethereum network, which will make it more cost-effective to build decentralized applications. The upgrade also aims to improve scalability and address issues related to token withdrawals.
The Shanghai upgrade comprises five EIPs: EIP 3651, 3855, 3860, 4895, and 6049. These EIPs provide solutions to issues related to transaction fees, scalability, and token withdrawal functionality.
Additionally, the Capella upgrade will enable full and partial withdrawals for validators on the Ethereum network. This upgrade is significant as it addresses the needs of validators who often have to manage large amounts of capital in the form of cryptocurrency.
What Ethereum holders need to do?
If Ethereum holders and users are using an exchange, digital or hardware wallet, they typically do not require any extra actions, unless specifically advised by the wallet provider.
What happens if stakers or node operators do not participate in the upgrade?
It is important for Ethereum users to update their clients to the latest versions because failure to do so can result in the client syncing with the pre-fork blockchain after the upgrade process. This would leave the user stuck on an incompatible chain and unable to operate on the post-Shanghai blockchain network. Therefore, it is crucial for users to participate in the upgrade to avoid any disruption.
The expectations of the community of Ethereum holders
The community of Ethereum supporters, known as "ETH Maxis," as well as analysts and developers, have presented various potential scenarios for ETH following the hard fork on Crypto Twitter. According to experts, the unlocking of ETH tokens could result in a temporary sell-off of the altcoin. However, a significant amount of staked ETH might be directed towards liquid staking projects or other staking options due to the current price of the altcoin and holders being at a loss during the unlocking period.
Another scenario arises from the Shapella upgrade being front-run and Ethereum's recent price rally, which reached a 2023 high above $1,900. It is possible that the ETH upgrade has already been factored into the price, and the token unlock may have little or no negative impact as previously anticipated by the community.
83% of ETH holders plan to stake more Ethereum within the next three months.
A recent survey carried out by the OKX exchange revealed that 83% of the respondents from the ETH community are optimistic about an increase in Ethereum staking over the next three months.
Following are the key findings of the survey:
As the token unlock is set to take place for the first time since the launch of the Beacon Chain contract in 2020, holders of ETH are confident that more tokens will be staked within the next three months, bolstering a bullish outlook for the asset in the medium-term.
The upcoming Shapella upgrade marks a pivotal moment for the Ethereum ecosystem, presenting an array of noteworthy advantages that are poised to entice a greater number of users and investors to the platform. With an assortment of improvements ranging from reduced gas fees for developers to enhanced scalability and transaction fee management, the upgrade is set to bolster the network's functionality and appeal. These developments are expected to significantly enhance the Ethereum blockchain, reinforcing its status as a leading blockchain technology.
