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Ethereum Shanghai Upgrade Grows Closer

It's currently impossible to withdraw staked Ethereum. The Shanghai update changes this. After the upgrade, all 16.5 million staked Ethereum will be able to be withdrawn.

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CoinSnacks
February 08, 2023 • Estimated Reading Time: 3 minutes

We spent a lot of time last year talking about the Ethereum Merge. As one of the most significant events in crypto history and the programming equivalent of swapping out a jet-engine mid-flight, it was hard not to.

The Merge has already paid dividends for Ethereum, with ETH now deflationary and having carbon emissions decrease by 99.99%.

However, the Merge was just step one in an ambitious roadmap for Ethereum.

Next up is the Shanghai upgrade, which took a big step forward this week with the successful launch of the Zhejiang testnet.

Shanghai and Zhejiang

Currently, it is impossible to withdraw staked Ethereum. Shanghai, slated for release in March, changes this. After the upgrade, all 16.5 million staked Ethereum will be able to be withdrawn.

However, before Shanghai can be released, it must undergo a series of dress rehearsals (or, stress-tests). The first of these rehearsals was the Zhejiang testnet, which was flawlessly completed this week.

What This Means For ETH

Every time there’s an event as significant as something like Shanghai, it’s important to consider how the market is going to react.And while it’s always difficult to predict, here are the potential different scenarios:

  • On one hand, the new ability to unstake ETH at any time might encourage more people to stake their ETH. This would be bullish for Ethereum, as sell pressure would be reduced, and for Ethereum staking protocols like Lido, which would potentially pick up more staking users, and, thus, earn more fees.

  • On the other hand, it’s also possible that people who have had Ethereum staked for (in some cases) years, will rush to withdraw and sell their ETH, or portions of their staked earnings. This would obviously be bearish for Ethereum. Add in the fact that March is pretty close to tax season (historically a time for selling), and it’s easy to see a world in which the price of ETH takes a hit post-Shanghai.

Ultimately, short-term price moves are always unpredictable. The important point is Shanghai is another step toward Ethereum fulfilling its roadmap, and if it does, these short-term price moves won’t matter in the long-run.