Barely two months since the highly-anticipated Ethereum Merge, the next upgrade, “Shanghai upgrade,” is making its presence felt, with a focus on tying up loose ends.
After taking a month-long break following the highly-anticipated and much-publicized Ethereum Merge, its developers reconvened last week. The primary item on the agenda is a discussion of the network’s next upgrade, the “Shanghai upgrade,” which will focus on tying up loose ends.
What is the Shanghai upgrade, and what should people expect from it? We will try to cover all salient points about it in this write-up.
The Shanghai Upgrade
The Ethereum network’s most recent update, the much-hyped Ethereum Merge, saw the network transitioning from the proof-of-work consensus to a proof-of-stake model. That meant a significant decrease in Ethereum’s carbon footprint since it would eliminate the need to rely on cryptocurrency miners, thereby reducing energy costs.
Before the complete transition on September 15, Ethereum’s co-founder, Vitalik Buterin, shared that the Merge was merely the first phase of several planned upgrades for the blockchain. The developers refer to four-part succeeding upgrades as “surge, verge, purge, and splurge.”
The Shanghai upgrade falls into the second upgrade, which refers to the addition of Ethereum sharding. Per the Ethereum Foundation, sharding is a scaling solution that could enable inexpensive layer-2 blockchains, reduce the cost of bundled transactions, and make operating nodes that secure the network more user-manageable.
During the Ethereum developers’ 148th bi-weekly All Core Developers (ACD) Zoom call, additional features that the developers plan to include in the Shanghai upgrade were discussed. In the meeting chaired by Tim Beiko of the Ethereum Foundation, one promising feature of Shanghai was discussed: the possibility of withdrawing staked ETH after the Shanghai upgrade.
And while the developers did not give a specific timeline nor provide a full-feature set, they did say that the abovementioned is the core focus of the Shanghai upgrade. The update would allow Ethereum validators who staked their ETH to help operate the network to withdraw the same.
The Merge’s proof-of-stake transition meant that validators would be paid interest if they stake (or lock up) their ETH with the network. However, with the current setup, validators cannot withdraw the staked ETH, which the Shanghai upgrade plans to do away with. With Shanghai, validators can both withdraw the ETH they staked and access whatever rewards they earned from staking.
The Shanghai upgrade will also introduce several “developer-oriented” tweaks to the Ethereum protocol. Nevertheless, the developers’ Zoom call failed to address one point that the Ethereum Foundation said would be a significant part of the surge phase where Shanghai falls under—the proto-Danksharding.
It’s a long-awaited feature because users know it can significantly lower Ethereum’s gas fees, which users pay to complete transactions on the blockchain. As it is, Ethereum’s gas fees are notoriously high; thus, many on-chain transactions are unaffordable.
Once released, the proto-Danksharding will initiate the first phase of the much-awaited transition to sharding, which we already mentioned previously. With sharding in place, network activity will be split into “shards” to increase capacity and pull down gas fees.
The core developers reached a consensus to review the proto-Danksharding further, and the Ethereum Virtual Machine Object Format (EOF) code changes before deciding to include them in the Shanghai upgrade.
Because the developers’ meeting failed to address it, it’s unclear whether the Shanghai upgrade will include proto-Danksharding or if it will be included in the subsequent updates. Depending on when the Shanghai upgrade takes effect, researchers said during the developer call that plans for the feature might be finalized before the year ends or early next year.
It’s possible that even if the proto-Danksharding is included in the Shanghai upgrade’s specifications sheet, it could take months (or years, probably?) before its full version becomes available or usable. If they push through with proto-Danksharding, it could mean that the Shanghai upgrade would have two parts.
Shanghai part one could arrive in February 2023, which includes the staked ETH withdrawals and other minor features. On the other hand, Shanghai upgrade part two, which will focus on proto-Danksharding, may not be until September next year.
Still, if everything goes smoothly, they could bundle all enterprise integration patterns (EIPs) together in one hard fork. If that happens, then the Shanghai upgrade could come to fruition “sometime in June or July.”
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