Ethereum is waiting to enable the withdrawal of clocked ETH again soon through the Shanghai update. Shanghai is now being tested on the Görli testnet and will then be added to the Ethereum mainnet.
Dress rehearsal at Ethereum (ETH): Yesterday, Tuesday, the update Shanghai was applied to the largest ETH testnet Görli and the developers reported a smooth start. In the weeks before, Shanghai had already been publicly tested on the Sepolia testnet. This brings Ethereum closer to the eagerly awaited possibility of being able to withdraw ETH deposited for staking. When Ethereum began preparing for the protocol change “The Merge” in December 2020, the option of staking for ETH also moved in with it. However, for security and stability reasons, it was specified that investors would not be able to freely dispose of and withdraw their staked Ethereum until after the protocol change (which took place in September 2022).
For the necessary Ethereum update Shanghai, a launch in March was last targeted, but now the date, which has not yet been set, could be delayed to the beginning of April. Sometimes Shanghai is called Shapella in the ETH community, because it brings small changes also from an update called Capella, which relates to Ethereum transaction fees. But public interest is focused on the reform in Ethereum staking. Currently, about 14 percent of all ETH is deposited for staking (market value around $28 billion) and in order to perceive liquidity through these assets as well, detours like Lido Staked Ether (STETH) had to be taken.
Thus, when Update Shanghai is activated, the big question looms as to how investors will react. Those who provided ETH for staking back in December 2020 did so when Ethereum was trading at around $600 – today ETH stands at $1,700. So the Shanghai update could also be a moment for Ethereum where investors realize profits. Lido Finance, as the market leader among ETH staking providers, is already preparing for a possible glut of withdrawals.
Conclusion: Ethereum on course for the future with Update Shanghai
With the Shanghai update – if everything goes as planned – the most pressing construction site for Ethereum from the point of view of investors will be closed, in which they can once again freely dispose of their capital in ETH, also in the case of Staking. This would complete phase one on the road to Ethereum 2.0, which began with “The Merge” and the protocol change. The to-do list will continue in 2023 and beyond with updates that should multiply capacity in the ETH ecosystem through sharding, while also lowering transaction fees. Thus, Ethereum makes a positive impression of achieving its development goals step by step, even if tolerable delays creep in.