Shanghai Goes Live: What to Expect
Shanghai is set to go live at epoch 194048, around 22:27 UTC (6:27 p.m. ET), allowing stakers to submit their ether withdrawal requests. Ethereum developers are confident in a smooth upgrade process, having completed three successful testnet upgrades. However, the last testnet upgrade faced minor delays due to insufficient node upgrades.
Despite these hiccups, developers assure the actual upgrade will proceed without issues. The Ethereum Foundation has doubled its “bug bounty” program awards to $500,000 to incentivize vulnerability reporting.
Market Reactions: Analyzing ETH Performance
Crypto market analysts offer insights on how ether might perform as Shanghai goes live. A Coinbase report suggests that ETH performance will depend more on the risk environment than any quirks associated with the upgrade. If risk assets sell off, people may choose to unstake and sell ETH to de-risk, potentially affecting its price.
However, certain factors will limit the amount of ETH that can be unstaked at once. Only 44% of nodes have changed their withdrawal credentials to the necessary 0x01 address, and only 16 partial withdrawal requests can be submitted per slot (every 12 seconds). Additionally, staking service Lido will release withdrawals following a protocol upgrade in May, further distributing selling pressure over several days.
Some crypto analysts believe the Shanghai upgrade will have limited or no impact on the ether market.
Technical Factors Influencing Unstaking
Several technical factors may influence the speed and impact of unstaking ether after the Shanghai upgrade. First, only 44% of nodes have updated their withdrawal credentials to the required 0x01 address, which allows for partial or full withdrawals. This limitation may slow down the process and reduce selling pressure.
Second, the system only permits 16 partial withdrawal requests per slot, which occurs every 12 seconds. This restriction may spread the selling pressure over an extended period, mitigating any significant price drops.
Staking Services’ Timelines Affecting Withdrawals
Staking services’ timelines also play a role in the withdrawal of staked ether. Lido, which holds approximately 23% of all staked ether, plans to release withdrawals after a protocol upgrade scheduled for May. This delay will further distribute the selling pressure over several days, reducing the likelihood of an immediate price drop.
Long-Term Implications of the Shanghai Upgrade
The long-term implications of the Shanghai upgrade for the Ethereum network and ether’s market value remain uncertain. As Ethereum transitions to a fully functional proof-of-stake (PoS) network, the upgrade could lead to increased efficiency, scalability, and reduced environmental impact, attracting more users and investors.
However, unforeseen challenges could arise during or after the upgrade, potentially affecting the network’s stability or ether’s market value. As with any significant technological advancement, the ultimate impact of the Shanghai upgrade on Ethereum and its cryptocurrency will only become evident over time.