With the successful integration of the Ethereum mainnet with the Beacon chain (PoS chain) known as ‘the merge.’ The network has fully switched from the PoW to the PoS mechanism. Now, it is gearing up for another upgrade called the ‘Shanghai upgrade.’
This upgrade is highly anticipated and promises more features to the Ethereum network to improve functionality. In preparation for the upgrade, the Ethereum Foundation (EF) DevOps announced the launch of a Pre-Shanghai testnet—Shandong—on October 14, 2022.
So, When Will It Happen?
According to the Ethereum foundation’s announcement on October 14, 2022, the Shanghai upgrade release is expected to take place in September 2023. This is as opposed to the ‘vague’ 6-12 months after the merge that was previously stated as a response to questions about staking withdrawals.
What Is Ethereum Shanghai Upgrade?
The Ethereum network will undergo its next update, called the Shanghai upgrade, which will bring about several significant improvements as well as other smaller ones to the chain.
As mentioned above, Shandong will kick-start the journey toward the Shanghai upgrade. Shandong is a cooperative experimental testnet that activates a set of Shanghai-considered EIPs for early client testing.
Following the launch of the testnet, EF DevOps introduced 5 Ethereum Improvement Proposals.
- EIP-3540: EVM Object Format (EOF) v1
- EIP-3651: Warm Coinbase
- EIP-3670: EOF - Code Validation
- EIP-3855: PUSH0 Instruction
- EIP-3860: Limit and Meter Initcode
Ethereum Improvement Proposals to Look Forward To
EVM Object Format
The most anticipated change—the EVM object format or EOF—looks at separating the code from the data. Currently, The separation of code and data, which is advantageous for on-chain code validation, is highlighted in EIP-3540. It will be a step towards interoperability. Code validation for EOF contracts will be made possible upon deployment via EIP-3670, a companion to EIP-3540. This allows contracts with incomplete PUSH data or unclear instructions to be rejected.
Beacon Chain Withdrawals
Another major upgrade with Shanghai is the activation of Beacon Chain withdrawals. After several proposals, the Ethereum network settled with the EIP-4895: Beacon chain push withdrawals as operations. EIP-4895 will allow Beacon Chain holders to withdraw their staked ETH as well as accumulated rewards. In addition, it will add a system-level ‘operation’ to ‘push’ validator withdrawals from the beacon chain to the EVM. These operations generate unconditional balance increases for the recipients specified.
Layer 2 Fee Reductions
A preliminary version of the process that would allow rollups to verify enormous amounts of data is another hotly debated update that some developers hope to include in Shanghai.
To help lower transaction fees on Layer 2 rollups, EIP-4844 will propose a proto-danksharding technique. This would enable more data to be processed on the network, lowering gas prices.
What Should Ether Holders Know About Shanghai Upgrade?
Ether holders should know that due to postponement, the Ethereum Shanghai upgrade launch might come later than the stipulated period, September 2023. This is not new, as the merge and other network upgrades within the crypto community have been postponed for one reason, like testing.
Also, a highly anticipated feature during the merge will be made possible following the Shanghai upgrade. That is the reduction in the gas fee. This has always been a problem for the network. This is also beneficial for stakers, who will pay a small fee to stake the asset.
Additionally, there is yet to be a definite approach to reducing the gas fee. There are currently various options that have been proposed, including the one mentioned above. The network has yet to conclude how to go about this. The Ethereum network will provide more information in the future.
Will Ethereum Fees Decrease After the Upgrade?
As stated above, one of the major upgrades—Layer 2 Fee Reductions—will focus on the gas fee. If you use Ethereum regularly, you will know that the transaction fee is usually high, especially when the network is congested, when demand is at its peak.
The plan has been laid out, and the improvements seek to address major issues to improve the network functionality. The road to the Ethereum Shanghai update is both close and far. It is close because we are only a few months from 2023, and the update is expected in September next year. However, it is far off because there could be a delay as it is nothing new.
For now, developers are working to improve the network. Over the next few months, they will finalize implementations: testing programs, fixing errors, and so on. All we can do is keep our fingers crossed and wait for the drop.
1. What date is the Ethereum Shanghai Upgrade?
Initially, the upgrade was expected to happen 6-12 months after the merge. But now, the ETA announced for the Shanghai upgrade is September 2023.
2. What is Ethereum Shanghai Upgrade?
The Shanghai Upgrade is the next to happen after the merge. The upgrade will address the separation of code and data, the withdrawal of staked Ethereum on the Beacon chain, and the reduction of Layer 2 blockchain transaction fees, among other improvements.
3. What happens to Ethereum following the Shanghai Upgrade?
Following the upgrade, the functionality of Ethereum is set to improve, especially when it comes to the gas fee for transactions which has always been a problem.
4. Will Ethereum Shanghai Upgrade increase ETH price?
It is complicated to say whether the upgrade will increase the price of ETH. The market believes that since it will reduce gas fees, the demand for Ether may increase, leading to a price increase. However, contrary to expectations, upgrades like these do not guarantee an increase in the value of an asset.