What Is Ethereum’s Shanghai Upgrade? ETH Staking Withdrawals Explained

The Shanghai upgrade is set to take place on April 12 at 11:27 PM UTC.

A huge hand holding colorful Ethereum sign above Shanghai.
  • The Shanghai upgrade will unlock millions of ETH currently being staked.
  • Not all locked ETH will be unlocked at the same time.
  • Shapella also consists of smaller upgrades that will go live on Wednesday.

Ethereum (ETH), the most used blockchain in the industry, will undergo a historical upgrade to its network in a few hours. The Shanghai upgrade is set to enable ETH staking withdrawals and permanently move Ethereum to the proof-of-stake consensus mechanism. 

However, not everyone understands what this upgrade actually means. Let’s look at the Shanghai upgrade and its implications for Ethereum and its users.

What is Ethereum’s Shanghai Upgrade?

Ethereum’s Shanghai upgrade is a hard fork of the Ethereum blockchain that will take place on April 12 at 11:27 PM UTC. The Shanghai upgrade will come bundled with Capella, another upgrade. The two upgrades, known as Ethereum Improvement Proposals (EIP), are called Shapella.

The Shapella upgrade is known chiefly for enabling ETH staking withdrawals. Until today, Ethereum users had to deposit and lock 32 ETH to become validators and help secure the Ethereum network.

With the Shanghai fork, also known as EIP-4895, validators can finally withdraw their staked ETH for the first time since 2020. There are currently over 18.1 million ETH, worth $34 billion at the time of writing, locked in the Beacon Chain deposit contract.

Does this mean that all 18.1 million ETH will be available for withdrawal immediately? No, validators will be able to withdraw only 43,000 ETH per day, potentially limiting the impact on ETH’s price.

Other Upgrades Inside Shapella

While EIP-4895 is the most known upgrade within Shapella, there are other minor upgrades that the Shapella fork will bring.

One of them is EIP-3651, aimed at lowering gas costs related to Maximal Extractable value (MEV) payments when accessing the COINBASE address (COINBASE doesn’t refer here to the crypto exchange but to a piece of software that allows developers to receive new tokens).

Another upgrade is EIP-3855. This upgrade introduces a new instruction PUSH0, which lowers gas costs for developers. EIP-3860 limits developer gas costs in specific cases, and EIP-6049, deprecates the SELFDESTRUCT opcode to limit gas costs.

The Shapella upgrade will take place on April 12 at 11:27 PM UTC. Readers can watch it live on YouTube and follow it on social media platforms like Twitter.

Shapella Watch Party

On the Flipside

  • No one knows exactly how the price of ETH will react to ETH staking withdrawals being enabled.

Why You Should Care

Ethereum’s Shanghai/Shapella upgrade is one of the biggest upgrades in recent years. Ethereum validators will finally be able to withdraw their staked ETH. If the event negatively impacts the price, investors can scoop up some cheap ETH.

Read more about ETH staking withdrawals:

Ethereum Staked ETH Withdrawals Coming Next Week: What It Means for You

Read more about the rising NFT sales on Polygon:

Polygon NFT Sales Surpass Solana, Now Trail Only Ethereum

This article is for information purposes only and should not be considered trading or investment advice. Nothing herein shall be construed as financial, legal, or tax advice. Trading forex, cryptocurrencies, and CFDs pose a considerable risk of loss.

Arturas Skur

Arturas Skur is a cryptocurrency news reporter at DailyCoin who covers Web 3.0 domains, DeFi, and Ethereum Layer-2s. With over five years of experience in journalism and public relations, Arturas brings his critical thinking and analytical abilities to deliver insightful news stories. In his free time, he enjoys hiking, playing with his dog, and reading.