Ethereum Takes a Big Step Forward with Successful Proof-of-Stake Transition
Ethereum's much-anticipated Shanghai upgrade has been completed, marking a major milestone in the network's evolution. The upgrade was triggered at 22:27 UTC and saw the implementation of several new features, including the ability for validators to withdraw their staked ETH for the first time. This move completes Ethereum's multi-year transition to a full proof-of-stake network
The transition to proof-of-stake is a significant milestone that has a long-standing goal for Ethereum. The Shanghai upgrade marks the final step in this transition and is a significant moment for the network's community.
According to data from the Ethereum block explorer Beaconchai.in, a total of 12,859 ETH were released in 4,333 withdrawals within the first hour of the hard fork.
Currently, around 44% of validators, or 248,043 of the total active 559,549, can request a partial or full withdrawal. The majority of withdrawals range between 2.8 to 3.2 ETH, suggesting that most of the withdrawals are staking rewards.
Several mechanisms are in place to prevent a flood of ETH from hitting the market, according to the Ethereum Foundation. These mechanisms include a gradual withdrawal process and the ability to freeze withdrawals in case of network issues or other unforeseen events. Ethereum will only permit 1,350 full validators to withdraw their stake each day over the next 18 months, and because each validator stakes 32 ETH, no more than 43,200 ETH ($83 million at current prices) can enter the market per day. It is unlikely that all validators will withdraw their ETH, so the impact on the market is expected to be limited.
Despite various predictions on possible ETH price fluctuations, the value remained stable in the hours following the upgrade. ETH saw slight gains as its price rose 0.2% over one hour. Bitcoin, by contrast, is up 0.3% over the same time period. However, 24 hours after the upgrade, ETH saw a spike of nearly 6% trading above $2000 as of the time of this writing.
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In addition to the withdrawal feature, the Shanghai upgrade also includes several other improvements to the network. These include a basis for conditional or cancellable payments, improved smart contract functionality, and support for the EIP-1559 fee market change.
Cancun is the next significant Ethereum update, which will include proto-danksharding, a feature designed to increase scalability by decreasing fees and speeding up transactions.
