Ethereum completes Shanghai upgrade

Ethereum successfully completed its Shanghai upgrade at 10:27 p.m. UTC on April 12, according to various update status pages.

Validators can now withdraw staked ETH

Ethereum’s Shanghai upgrade introduces an important new feature that allows validators who previously staked ETH on-chain to withdraw those tokens for the first time.

However, the upgrade will not flood the market with ETH. Ethereum will only permit 1,350 full validators to withdraw their stake each day over the next 18 months. Because each validator stakes 32 ETH, no more than 43,200 ETH ($83 million at current prices) can enter the market per day — and it is unlikely that all validators will withdraw their ETH.

According to data from Nansen, 170,689 ETH is waiting for full exit and 4,799 validators are waiting for full exit, amounting to approximately 1% of stakers and staked ETH.

However, more pessimistic estimates suggest that up to 1.54 million ETH could be withdrawn shortly after the upgrade because of different partial withdrawal rules. Other estimates suggest that the upgrade has led to $5 billion of unrealized losses.

Third-party staking platforms, meanwhile, are operating on their own schedule. Lido, for example, has suggested that users will be able to begin withdrawals around May.

Shanghai also includes other improvements, such as a basis for conditional or cancellable payments, features that will reduce contract size and certain contract risks, and improvements that will lower gas fees for developers.

Shanghai is just one step on ETH roadmap

Shanghai represents the most significant Ethereum development in months, and the event has been widely observed. ConsenSys has launched a series of commemorative NFTs, while its wallet project MetaMask has provided a user guide and warned of scams.

Despite the anticipation, prices fluctuated only slightly around the time of the event. ETH saw slight gains as its price rose 0.2% over one hour and rose 1.3% over 24 hours. Bitcoin, by contrast, was up 0.0% and down 0.9% over the same time period.

Previously, Ethereum underwent another important upgrade called the Merge. That upgrade took place in September 2022 and saw Ethereum fully transition from proof-of-work (also known as mining) to proof-of-stake.

And although the Merge represented a complete change to staking, validators were able to deposit their stake as early as November 2020.

The next major Ethereum is titled Cancun. It will feature proto-danksharding, a feature that aims to improve scalability by improving fees and transaction times.