After many months of preparation, testing, delays, and developments, the Ethereum Shanghai-Capella Upgrade, also known as the Shapella upgrade has finally gone live on the Ethereum mainnet! This had been one of the most highly anticipated events in the crypto world, as it signified the completion of Ethereum's transition into a fully functioning proof-of-stake (PoS) blockchain network.
This is especially so because of one of the Ethereum Improvement Proposals, or EIP-4895 - one of the most sought-after improvements ever since the Ethereum Merge took place late last year on September 15, 2022. The EIP-4895 effectively unlocked the feature wherein validators on Ethereum's PoS Beacon Chain could now unlock their staked Ether (ETH) from the deposit contract for the first time since December 2020, when the Beacon Chain was first launched.
Thus, Ethereum PoS validators, who had been responsible for validator transactions on the network and had also earned staking rewards in the process will not be able to redeem those rewards and enjoy the fruits of their labor!
This is the reason why this upgrade was such a monumental one for the largest smart contract-capable blockchain network in the world, as it transitioned from PoW to the more environmentally friendly PoS.
The Shanghai-Capella upgrade, also known as Shappela, in short, was triggered at 22:27 UTC, and finalized at about 22:42 UTC on April 12. Additionally, within half an hour of the Shanghai Upgrade going live on the Ethereum mainnet, about 285 withdrawals were processed in epoch 194408. These 285 withdrawals equated to about 5413 ETH or roughly $10 million worth of ETH tokens, according to data from beaconcha.in.
Another interesting fact is that the Ethereum Shanghai Upgrade has also unlocked potentially $36.5 billion worth of ETH tokens that are currently staked to the Beacon Chain. According to data from stakingrewards.com, about 15.6% of the total ETH supply is now unlocked.
However, there are mechanisms in place to ensure that there isn't a sudden flood of ETH supply in the market. To ensure this, only 16 withdrawals can be processed in every single block of Ethereum, which occurs every 12 seconds. thus, despite the 18 million ETH tokens unlocked post this upgrade, only about 115,200 withdrawals can be processed in a day.
This is a very crucial step that has been put into place so as not to upset the market condition. Ethereum is the biggest player in the DeFi space, with the largest market capitalization and the total-value-locked in DeFi. Now, slowly and steadily a part of the locked ETH tokens will be unlocked from the Beacon chain so that these validators can realize some of the gains they had accumulated in the past over two years, since the launch of the Beacon Chain.
Despite the Ethereum Shanghai Upgrade going live without a hitch, ETH stayed rather muted post the event. There was very little to no action in ETH prices whatsoever. However, that being said, ETH prices have seen a huge run-up since the beginning of 2023, in line with the overall recovery in bullish sentiments in the crypto market. ETH price has gained over 60% in the past three and a half months and from a technical point of view, is well positioned to continue its rally in the future, provided the overall crypto sentiments continue to favor the bullish side!
Values as on April 13, 2023.
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