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- The new upgrade will enable validators to withdraw their staked ETH for the first time since 2020.
- Speaking on the crypto podcast Unchained, analysts suggest that the ETH price is not likely to suffer.
- Scalability, widening access, and reducing costs are targets of the update.
The long-awaited ‘Shanghai’ upgrade to the Ethereum blockchain will go live tomorrow, Wednesday 12th, in what is expected to be one of the most significant market events of the year. The upgrade is significant because it will allow validators to withdraw their staked ETH for the first time since staking was introduced with the launch of the Beacon Chain in December 2020.
The new update is a hard-fork of the Ethereum blockchain that is also known as ‘Shapella’, a portmanteau of Shanghai, which refers to the upgrade to the blockchain’s execution layer, and Capella, a parallel upgrade of its consensus client.
In a video posted to YouTube by crypto podcast Unchained, host Laura Shin asked a number of industry analysts to share their views on the significance of the update. Of the much discussed unlocking of staked ETH, Christine Kim, VP of Research at Galaxy Digital argued that the move represents “taking the training wheels off of Ethereum’s proof-of-stake mechanism” but would not have a “big impact on price”, citing the coin’s daily trading volume. Andrew Thurman, Content Lead at Nansen hypothesized that on the contrary, a successful upgrade would encourage ETH depositing activity, reducing the supply and buoying the price.
The bigger picture of the upgrade is about scalability, claimed Shin and Kim. Ethereum’s roadmap calls for moving the execution of smart contracts and user activity to layer 2 rollups that can submit and batch user transactions more cheaply and efficiently than under the present protocol, Kim added. According to the information on the Ethereum website, these rollups will reduce “gas fees for users making Ethereum more inclusive and accessible for people everywhere”.
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