On April 12th, at 10:27 p.m. UTC, Ethereum completed its highly anticipated Shanghai upgrade, which brings forth several improvements to the blockchain.
One of the most significant new features introduced in this upgrade is the ability for validators to withdraw staked ETH for the first time. However, Ethereum has limited the number of withdrawals to 1,350 full validators per day over the next 18 months. As each validator stakes 32 ETH, no more than 43,200 ETH (or $83 million at current prices) can enter the market daily. Nonetheless, it is unlikely that all validators will withdraw their ETH. Currently, less than 1% of stakers and staked ETH, or 170,689 ETH and 4,799 validators, respectively, are waiting for a full exit.
Some pessimistic estimates suggest that up to 1.54 million ETH could be withdrawn shortly after the upgrade due to different partial withdrawal rules. Additionally, the upgrade has led to an estimated $5 billion in unrealized losses.
In addition to the withdrawal feature, Shanghai includes other improvements such as conditional or cancellable payments, which will reduce contract size and certain contract risks, and lower gas fees for developers.
The upgrade has been widely observed and has been a major Ethereum development in recent months. ConsenSys has even launched commemorative NFTs, and MetaMask has provided a user guide while warning users about potential scams.
Despite the anticipation, the event had little effect on ETH prices, with slight gains of 0.2% over one hour and 1.3% over 24 hours. Bitcoin, on the other hand, saw no change in price over one hour and a 0.9% decrease over 24 hours.
The previous Ethereum upgrade called the Merge, occurred in September 2022 and marked Ethereum’s full transition from proof-of-work to proof-of-stake. The next major Ethereum upgrade, Cancun, will feature proto-danksharding, which aims to improve scalability by reducing fees and transaction times.
Third-party staking platforms like Lido are working on their withdrawal schedules, with Lido suggesting users can begin withdrawals around May.
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