Ethereum Shanghai Upgrade
Ethereum which is one of the biggest and most used blockchain in the world, is a few days shy of a major upgrade that can attract billions of dollars into its native token. This upgrade will finally give validators the ability to withdraw staked coins. Ethereum staking is the process of transaction validation on the ETH block chain network.
The Ethereum network launched in 2015 came with proof of work consensus and could execute smart contracts. However ETH network became busy due to its functionality and it made transactions slower and expensive. This raised a major problem that Ethereum co founder, Vitalik Buterin named “The Blockchain Trilemma”. What this meant was that improving the efficiency of the blockchain would indirectly affect decentralization and security.
Ethereum then came up with a solution by changing the Proof of work (PoW) consensus to Proof of stake (PoS) which was known as ETH 2.0. A separate chain that used the (PoS) consensus was used to help the transitioning of ETH 2.0 to a new state in September 2022. This chain was named Beacon chain and it required users to stake 32 ETH to become a validator and secure the network as well. These users get ETH rewards in return for their stakes and the staked ETH became locked up.
The Ethereum Shanghai upgrade is a very important step towards the continuous growth of the Ethereum protocol, this is because it finalizes the change of ETH from PoW to PoS. It is also the first major upgrade since the merge in September 2022.
How Does it Affect Ethereum Users and the Ecosystem?
This new upgrade will deploy ETH withdrawals which will allow current validators in the network to unstake the ETH they locked up in the Beacon chain. It will also initiate more liquidity for stakers and the general market. There will be a deployment of warm coinbase addresses, PUSH0 Instruction and Limit and meter initcode.
However majorly, ETH users might notice lower transaction fees on the network and the availability of using decentralized applications on the network for interested users.