The Ethereum blockchain received arguably the most significant and biggest upgrade ever on September 15th, with changes to the “merge” and proof-of-stake. With “Shanghai,” however, the next upgrade is already around the corner.
After a month-long break, Ethereum developers met last Friday for their 148th All Core Developers (ACD). meeting, Under the chairmanship of Tim Beiko of the Ethereum Foundation, the developers discussed plans for Shanghai.
Together, they found a consensus that Shanghai should, at a minimum, include the withdrawal of staked ETH (EIP 4895) and three other minor network optimizations (EIP 3651, 3855, and 3860). In addition, the core developers reached an agreement to further review EIP 4844 and Ethereum Virtual Machine Object Format (EOF) code changes for possible inclusion in the Shanghai upgrade.
Another much-loved update that some developers are looking to incorporate in Shanghai is what’s known as proto-danksharding, EIP 4844. Proto-danksharding is an early version of sharding that introduces a new transaction type for Ethereum. It can be used to settle batches of transactions from layer 2 rollups in a cost effective manner.
However, representatives from Besu and the Netherlands expressed concern about the readiness of implementation, saying that the complexity and scope of the code change are not yet well defined.
What effect will Ethereum have on the Shanghai price?
Considering the fact that there are currently around 15.51 million ETH at stake, which is about 12.7% of the total supply, the Shanghai upgrade could put heavy selling pressure.
Shanghai may offer investors their first chance to unload their ETH, some of which have been at stake for two years. Even if half of all staking ETHs held their positions, the selling pressure from the other half would be enormous.
Two recent significant factors for the price of Ether were the high proportion of ETH and illiquid ETH through the lockup of EIP-1559, also known as the “ultra sound money” upgrade. The upgrade implemented a fee burn mechanism on 05 August that erases the ETH base fee paid for recording transactions on Ethereum.
This causes a decrease in the supply of ETH when more ETH is liquidated through the issuance of ETH.
The core developers haven’t agreed on an upgrade date yet. Depending on how proto-danksharding proceeds, doing a hard fork with only ETH withdrawals and smaller EIPs could mean the Shanghai part one coming in February 2023. Thus, Shanghai Part Two, which will focus exclusively on proto-danksharding, will be integrated. In the mainnet in September.
Conversely, bundling all EIPs into one hard fork could mean that Shanghai is “sometime in June or July”.
Ahead of today’s FOMC meeting, ETH investors remain cautious. The price is trading below the 200-day SMA, but above the 100-day SMA.