The Shapella (Shanghai+Capella) upgrade was successfully rolled out on Wednesday evening, marking yet another major success for the Ethereum blockchain. The upgrade was installed shortly before 6:30 p.m. EST and completes Ethereum’s transition to the proof-of-stake type consensus mechanism (Proof of Stake). This transition began with the Merger which took place last September. Ethereum’s move to the Proof of Stake consensus mechanism involves users locking up their ETH tokens (staking) to allow on-chain transactions to validate, and being rewarded for this stake with newly generated ETH. Since staking began in 2020, over $34.56 billion worth of ETH has been staked on the network.
The implementation of Shapella was not without difficulties and was notably marked by numerous concessions made by the main developers of Ethereum to accelerate its launch. Originally, Shapella was originally supposed to include many other improvement proposals, such as the proto-danksharding – a data sampling process that would make Layer 2 transactions on the network much cheaper and faster – and a suite of updates for the Ethereum virtual machine (Ethereum VirtualMachineEVM), the mechanism underlying the network that deploys smart contracts.
However, these updates have been removed to ensure ETH withdrawals are accessible as soon as possible. The pressure around the Shanghai launch made sense given that security and accessibility to tens of billions of dollars in cryptocurrencies were at stake. And any flaws in the execution of the upgrade could have resulted in huge difficulties. for the network, not only from upset users, but also from intermediaries like the staking pool Lido and exchanges such as Coinbase, Huobi Or kraken. Furthermore, given the regulatory uncertainties surrounding staking over the past few weeks, government regulators are no doubt also closely monitoring the progress of the withdrawal process.
Either way, enabling the withdrawal feature should give Ethereum users more flexibility when it comes to managing their assets. In the first hour after the hard fork was deployed, a total of 12,859 Ether was unlocked in 4,333 withdrawals, according Ethereum block explorer beaconchai.in. About 44% of validators representing 248,043 of the total 559,549 assets, can request a partial or full withdrawal. The majority of withdrawals at the moment are between 2.8 and 3.2 ETH, suggesting that it is mainly staking rewards being withdrawn.
At the time of installing the update, the price of ETH had remained relatively stable, before registering an increase of almost 5.5% over the last 24 hours at the time of writing this article to reach $1960. The hard fork can theoretically unlock 18.1 million ETH on the beacon chain, which currently equates to over $34.8 billion, however, there are many mechanisms in place to prevent a flood of ETH from flooding the market. According to estimates from the crypto analysis firm Glassnodeless than 1% of ETH in staking is expected to hit the market in the first week.
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