What Is the Shanghai Upgrade?

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What Is the Shanghai Upgrade?

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Ethereum requires validators to “stake” — or lock up — their ETH to help run the blockchain. 

In return for staking, you receive ETH over time. You cannot “unstake” and collect your rewards until after the “Shanghai Upgrade”.

The Shanghai Upgrade is an upcoming update to the Ethereum blockchain, which will allow unstaking and provide some additional efficiency improvements to the blockchain. 

The date for the upgrade has been moved several times, so it’s unclear when it will finally arrive.

Once Shanghai comes, around 15% of all ETH in circulation will become available for unstaking.

People are split, however, over how the upgrade will affect the price of ETH.

Bearish voices are concerned that all of this ETH will be sold immediately. 

The bulls, on the other hand, think Shanghai will only encourage more people to stake.

After Shanghai, the next biggest upgrade to Ethereum will introduce “sharding”. 

This will break the blockchain up into several smaller parts and significantly increase the number of transactions per second it can process, as well as decrease gas fees by a lot.

It’s still unclear exactly how Shanghai will affect Ethereum’s price. 

One thing that’s for certain, however, is the upgrade is a big step forward for Ethereum, and it’s highly anticipated in the crypto space.

The biggest change that the Shanghai upgrade will introduce to Ethereum will be:

“I love this stuff - Bitcoin, Ethereum, blockchain technology - and what the future holds.”

Abigail Johnson

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