What opportunities will the Ethereum Shanghai upgrade bring?

Author: FalaBlock

At the Ethereum Core Developers Meeting 151 held on December 8, the Ethereum core development team announced that March 2023 will be the deadline for the Ethereum network's Shanghai hard fork. Through this Shanghai upgrade, the Ethereum network will fully transition to a Proof of Stake (PoS) consensus mechanism, which may effectively address the centralization issues caused by The Merge.

What is the Ethereum Shanghai Upgrade?

With continuous forks and upgrades, the Ethereum community has finally welcomed the Shanghai upgrade, which will introduce fundamental changes to EVM functionality in a nearly complete ETH 2.0 version.

As Ethereum developer Tim Beiko stated, the Shanghai upgrade will address three key issues surrounding Ethereum, including changes to the EVM object format, the Beacon Chain's unstaking functionality, and Layer-2 fee reductions.

The Shanghai upgrade will officially introduce EIP 3540, also known as the EVM object format. The core element of this EIP is the separation of code and data. This could be extremely beneficial for validators on the ETH network. In addition to code-data separation, EIP 3540 also introduces a new contract code section that helps optimize processing and resolve complex functional modules, such as account abstraction and control flow in the EVM.

The Shanghai upgrade will also address the exit issue for staked ETH on the Beacon Chain. Currently, Ethereum stakers cannot withdraw their previously staked ETH, which will be resolved through the Shanghai upgrade.

Finally, the Ethereum Shanghai upgrade optimizes the issue of Gas fees, which is of utmost concern to the ETH community. The Shanghai upgrade will reduce Gas prices on the Ethereum network to some extent by balancing block sizes and increasing the CALLDATA functionality of blocks.

Why is the Ethereum Shanghai Upgrade so important?

The Ethereum Shanghai upgrade will be a significant milestone on the Ethereum roadmap:

● Lower Gas fees: One of the anticipated impacts of the Shanghai upgrade is the reduction of Gas fees related to Layer-2 solutions running on Ethereum, such as Polygon and Optimism. These similar Layer-2 solutions have already made Ethereum faster and cheaper to some extent, and this Shanghai upgrade will further optimize the Gas fees for transactions on Ethereum.

● Unstaking of staked ETH tokens: Before the Ethereum Merge, anyone interested in becoming a validator on the ETH2.0 Beacon Chain had to stake a certain amount of ETH in a smart contract, and these staked ETH remained locked in the contract after The Merge. However, with the Shanghai upgrade, the staking lock will be lifted, allowing ETH stakers to gradually reclaim their ETH from the Beacon Chain according to certain rules.

● Updates to smart contract facilities: This is another important update expected in the Shanghai upgrade. Ethereum is the largest blockchain network supporting smart contracts, and the Shanghai upgrade will maintain ETH's leading position in this regard by introducing EOF (EVM Object Format).

In terms of Ethereum's future price, the Shanghai upgrade will help accelerate transaction speeds on Ethereum. Additionally, the upgrade will simplify the process of handling ETH transactions through Layer-2 solutions like Arbitrum and Optimism, which will benefit ETH's mainstream adoption and application scenarios.

According to Ethereum founder Vitalik Buterin, Layer-2 solutions on Ethereum are an indispensable part of the Ethereum blockchain network and play a crucial role in maintaining the network's affordability and cost-effectiveness.

Overall, the Shanghai upgrade is critical for the future of Ethereum and ETH prices. With a fully defined ETH roadmap now public, investors are likely to be optimistic about ETH soon breaking through its existing price thresholds.

How can we participate in the ecosystem after the Ethereum upgrade?

After the ETH2.0 mainnet merge, all transactions on the Ethereum network will no longer be validated by energy-intensive "miners," but by individuals and organizations known as "validators" who have deposited or staked a significant amount of ETH. Anyone who stakes more than 32 ETH can meet the minimum requirement to become a validator node.

With the support of EIP 1559 passed during the London upgrade, users or processes that wish to be prioritized for packaging can choose to pay a "tip" (Priority Fee) to the validator nodes for faster and prioritized packaging opportunities. Under this income structure, the annual income for Ethereum validators has increased from 3% to nearly 7-8%. Additionally, as mentioned earlier, after the Shanghai upgrade, the ETH network will open the unstaking functionality for nodes staking ETH on the Beacon Chain, which will undoubtedly greatly enhance the attractiveness of ETH.

Therefore, becoming a validator on the ETH2.0 network may be an excellent choice for participating in the ETH2.0 ecosystem after the Shanghai upgrade. However, the 32 ETH entry threshold and the technical work involved, such as with mev-boost, which requires frequent maintenance, can make it challenging for ordinary users.

Thus, apart from a few whales and tech enthusiasts, joining a mining pool is the mainstream solution.

The well-known crypto asset value growth platform FalaBlock offers ETH staking services to ordinary users, assisting them in participating in ETH node construction to obtain stable returns. Supported by massive computing power from the ETH and Filecoin networks, FalaBlock provides services such as Filecoin mining and ETH node computing power construction, becoming the most robust choice for users' crypto asset appreciation, aiming to provide users with a very secure and efficient non-custodial Ethereum node operation service.