Monday, 27 March 2023

Crypto News

Next stop Shanghai — Ethereum’s latest milestone approaches

Next stop Shanghai — Ethereum’s latest milestone approaches

The Ethereum ecosystem will continue its ongoing metamorphosis as the highly anticipated Shanghai upgrade draws near. The latest preeminent smart contract blockchain protocol improvement will activate Ether (ETH) withdrawals from Ethereum’s Beacon Chain.

The Merge marked a significant milestone for the Ethereum network in 2022, with the blockchain platform shifting from proof-of-work to proof-of-stake consensus. That change introduced validators as the new “miners” of the network, with staking ETH becoming a key component in maintaining the network.

While full validators were required to stake 32 ETH to process transactions and add new blocks to the network, the broader ecosystem could stake smaller amounts of ETH to earn a share of rewards — much like an investor that puts capital into interest-bearing accounts.

Those that locked up ETH to become validators have been unable to withdraw their staked holdings from the Beacon Chain. This changes with the Shanghai upgrade, and is a major reason for the increased fanfare around the latest change to the Ethereum network.

The Shanghai upgrade features a handful of Ethereum Improvement Proposals (EIPs) in addition to activating staking withdrawals. Cointelegraph reached out to members of the ConsenSys team, the Ethereum Foundation and analytics firm Nansen to unpack all aspects of the upcoming milestone.

Capella x Shanghai = Shapella

The vocabulary of the upcoming changes features two simultaneous upgrades that have been amalgamated to encompass all facets of the upgrade.

Shanghai refers to changes to Ethereum’s execution layer, mainly enabling staked ETH to be deposited to execution layer wallets. The Shanghai upgrade requires a simultaneous change to the Beacon Chain, which has been dubbed Capella.

Justin Florentine, staff protocol engineer for ConsenSys’ Hyperledger-Besu, further explained the combined upgrades at the execution and consensus layers:

“It is doubly named because it is the first simultaneous upgrade of Ethereum’s execution layer and consensus layer, and is highly anticipated because it will enable staked ETH withdrawals.”

Within the Ethereum ecosystem, execution layer upgrades are named after cities that have hosted Devcon events, while consensus layer upgrades are named after stars. Therefore the upcoming upgrade’s technical name is Shapella, combining Shanghai and Capella.

Nevertheless, given the focus on activating staked ETH withdrawals, the wider cryptocurrency ecosystem…

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