The Ethereum network is set to change significantly again with the Shanghai upgrade.
This change is designed to give cryptocurrency users access to their staked ether (ETH) funds for the first time. It’s a major change for the platform, which currently requires users to lock up their ETH tokens indefinitely. The upgrade will allow ETH holders to stake the tokens without locking them up, perform transaction validations, and receive rewards of newly created tokens.
Last Wednesday, March 20, Ethereum’s Shanghai-based development team announced the hard fork upgrade would take place on Saturday, March 30. The announcement was made in a blog post on the Ethereum Foundation website and followed several days of airdrops of ETH to ETC holders and users who participated in token sales in the past.
According to the announcement, the Shanghai hard fork will bring with it several upgrades that have been “a long time coming.” The most notable change will be the ability for staked ETH users to access their funds for the first time. This change is significant because it signifies Ethereum’s shift from proof-of-work (PoW) mining to its more energy efficient proof-of-stake (PoS) mining model.
The Shanghai Upgrade
The Ethereum (ETH) Shanghai upgrade will make some significant changes to how ETH tokens are used on the Ethereum network. The update, expected to go live in March 2023, will affect how users interact with Proof-of-Stake (PoS) Beacon Chain network backbones, which were created as part of the platform’s shift from proof-of-work (PoW) systems to PoS.
The Beacon Chain was developed to help the Ethereum network manage its current and future scalability problems, which can be caused by the excessive number of transactions that must be processed simultaneously on any given day. By moving processing power off of smart contract blockchains onto a second chain, ETH developers hope to ease the burden on existing chains while also freeing them up for future upgrades. While PoW systems have been used successfully in other blockchain platforms like Bitcoin and Litecoin, they have proven problematic for Ethereum because they require miners to continually process transactions while they are receiving no rewards for their efforts.3
Along with providing ETH holders with access to staked funds, the Shanghai upgrade is expected to make other significant changes to Ethereum networks too. It is believed that this hard fork could finally fix lingering issues.
Optimism to upgrade to Bedrock
Ethereum is a blockchain platform that allows developers to build and deploy decentralized applications (dapps). Ethereum has a native cryptocurrency called Ether, which can be traded on cryptocurrency exchanges and is used as a trading pair pegged to dollar such as ETH USDT.
When the Ethereum network upgrades to Bedrock in 2019, many investors will likely want to upgrade their existing ERC20 token contracts so they can benefit from improved security features and reduced gas costs. This means there may be more demand for ETH tokens as well as an increase in interest from new investors who want to buy into upcoming ICOs that use this updated version of Ethereum’s smart contract system.
The ZK-rollup race intensifies
The ZK-rollup is a new feature that will be added to Ethereum’s blockchain, and it’s a big deal. The upgrade makes transactions more private and secure by allowing users to send transactions without revealing their identities or other sensitive information.
The ZK-rollup race intensifies as different teams of developers compete to add this feature first. If one team succeeds in adding it before anyone else, they could gain an advantage over other projects trying to improve Ethereum’s privacy features–and that would mean good news for the cryptocurrency’s price going forward!
What will happen to Ethereum after the upgrade?
When the Ethereum network upgrades to a new version of its protocol, it does so in a process called a “hard fork.” It’s not a technical term but rather one that describes what happens when the blockchain splits into two branches. The first hard fork occurred in 2016, when Ethereum Classic was created. This was due to a disagreement over whether or not transaction history should be altered after a security breach led to the theft of $50 million in Ether.
There are some things to take into account when you decide to withdraw your ETH from staking pools. First, there’s the issue of timing. You can only make withdrawals at certain times. After March 2023, you can withdraw your ETH whenever you want.
Second, there is an upper cap on how much you can withdraw each day. If the price of ETH rises after the hard fork, and you have a large stake in staking pools, you might end up withdrawing more than what they currently hold for you on their share sheets. The withdrawal cap prevents this from happening—there just won’t be enough room for all validators to get out of their stakes at once if the price skyrockets.
How Will It Affect Ethereum Price?
The Shanghai upgrade is coming in just a few days. Chinese miners and investors are getting ready for it. And when it happens, it will probably cause a spike and stability in the price. But after that spike, there’s no reason why Ethereum has to go back down again.
The main thing holding Ethereum back is its lack of use cases for businesses. But as soon as one or two major companies announce that they’re using ETH for something (like Starbucks did with Bitcoin), we’ll see a big jump. The possibilities are endless: from voting systems to loyalty programs to supply chain management, there’s a lot that businesses can do with smart contracts.
What to expect from Ethereum’s next big upgrade?
When the Ethereum network upgrades, it’s likely that the ETH price will rise. This is because there will be more developers building on top of ethereum and more people using dapps on the network.
The first part of this article focused on what exactly Casper and Sharding are, how they work and why they’re important for Ethereum moving forward. In this second part, we’ll look at what we can expect from these upcoming upgrades in terms of their impact on the price of ETH (Ethereum).
While there’s no doubt that the upgrade will be a significant milestone for Ethereum, there’s also reason to believe that it will actually be quite positive for the price of Ether.
To many investors and traders, this can only mean one thing: with an uncertain timeline ahead of them, and with no definite date set for when things will change, they are likely looking at an Ethereum price drop (at least in the short term).