- Ethereum developers eyeing February for release of Shanghai upgrade in public testnet.
- The upgrade which is planned for March will prioritize enabling withdrawals of staked Ether (ETH).
Ethereum developers are eyeing February for the public testnet launch of the Shanghai upgrade.
This was disclosed by Christine Kim, a research associate at financial services and investment management company Galaxy Digital.
Kim, writing in a research report for Galaxy, noted that the testnet will precede the mainnet deployment of the Shanghai upgrade scheduled for March. This is according to the decision reached by Ethereum developers during their first All Core Developers Call (ACDC) for 2023 in which she participated.
“Developers reaffirmed their commitment to try and target early February for launching public Shanghai testnets,” she wrote.
The research associate at the crypto and blockchain-focused firm added that the upgrade will solely prioritize enabling the withdrawal of staked ETH. Based on this, the developers are cutting out any proposed code changes that could likely delay the time target.
Kim reveals that due to this the developers decided to drop all Ethereum Improvement Proposals (EIPs) related to EOF. EOF stands for the EVM (Ethereum Virtual Machine) Object Format. The upgrade, dubbed EVM 2.0, is supposed to introduce several changes to the code execution environment of Ethereum. Despite its removal from Shanghai, testing of its code is still ongoing.
Similarly, the developers also postponed other proposed changes. These include EIP 5843 and EIP 5988 proposed by Ethereum foundation developer Jared Wasinger, and StarkWare developer Abdelhmaid Bakhta respectively. A proposal to introduce SSZ, a more modern and updated serialization format for encoding structured data, was also postponed. SSZ was proposed by Etan Kissling, a developer with the Ethereum Nimbus (CL) client team.
How will the market react to unlocking staked ETH?
Market analysts have raised concerns that the Shanghai upgrade could cause massive price volatility to hit the ETH market. The concerns are because the upgrade would enable ETH stakers to withdraw their staked tokens and rewards.
The Shanghai upgrade will be the first time some stakers can access their tokens since the PoS Beacon chain launched in 2020. Around 15 million ETH worth over $20 billion is staked at present. These stakers could be eager to cash out their tokens, thereby exerting sell-side pressure on ETH and driving the price down.
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Meanwhile, some analysts have also opined that Shanghai could drive ETH price up as it is the first major upgrade since the Merge upgrade. The Merge upgrade migrated the Ethereum blockchain from an energy-intensive proof-of-work (PoW) network to a proof-of-stake network.
The price of ETH was also driven up prior to the upgrade. Additionally, optimistic analysts expect that enabling staked ETH withdrawals will, in the long term, attract more participants including institutions to stake ETH to earn yield. At present, ETH is trading at around $1,300, up 4.73 percent in the last 24 hours.