What Is Ethereum Shanghai Upgrade?

As we are inching closer to this major upgrade for Ethereum, pieces of information about it are already appearing on the internet. Here at Coins Academy, we trimmed down the important details you need to know and possible questions that you might have about Ethereum Shanghai Upgrade!

TL;DR & Key Takeaways:

  • Ethereum is a decentralized computing platform with its own native programming language and its own native cryptocurrency, ETH (Ether).
  • Shanghai Upgrade will be a move to “unfreeze” ETH from the Beacon Chain Staking.
  • Ethereum moved from the Proof-of-Work mechanism to a Proof-of-Stake Mechanism during The Merge in September 2022.
  • Prior to Ethereum Shanghai Upgrade, users can stake Ethereum but it is a one-way stake because tokens are locked.
  • The upcoming Shanghai upgrade will enable users to withdraw the Ethereum that they have staked prior to The Merge.
  • This brings about the argument among traders about whether these tokens will crash or will increase in value.

What is Ethereum?

Ethereum allows developers to create decentralized applications using smart contracts. As a decentralized platform with its own native programming language and cryptocurrency, Ether, users can get rewarded in Ether(ETH) for completing work that favors the blockchain. Ether (ETH) can be traded on exchanges like Coins Pro or converted to Fiat by using Coins.ph, which can be used to pay bills or buy load!

Ethereum Energy Consumption

As the pioneer of smart contracts, there are more than 2,700 Dapps built on Ethereum. As good as it sounds, Ethereum still has its drawbacks, it has low throughput of 15-30 transactions per second and requires a lot of resources (Computing & electrical due to Proof-of-Work). To be exact, the mining of Ethereum consumes about 73.2 TWh annually, an energy equivalent of a medium-sized country like Austria.

Still, confused about it? Learn more about Ethereum, and how it works on Coins Academy!

What is Ethereum Shanghai Upgrade?

The next major Ethereum Upgrade coming this March, is called the Shanghai Upgrade, even though it is not as extensive as the Ethereum Merge, it is still considered a substantial upgrade as it encompasses major changes in the Ethereum Network. As there are significant changes to make, developers are endlessly debating whether to include or not to include specific features on this upgrade.

The Ethereum Shanghai Upgrade consists of 4 EIP or Ethereum Improvement Proposal, EIP-4895: Beacon Chain Push withdrawals as Operations, EIP-3860: Limit and Meter Initcode, EIP-3855: PUSH0 Instruction and EIP-3651: Warm COINBASE.

The most important EIP would be EIP-4895: Beacon Chain Push Withdrawal as Operations which will unfreeze ETH from the Beacon chain, allowing you to withdraw your ETH from the Beaconhain, which was not available prior.

Why is Ethereum Shanghai Upgrade needed?

From the inception of Ethereum, the Proof-of-Work mechanism was used to process transactions within the network. However, as previously mentioned, it takes a huge amount of energy to be able to perform its duty, which lead to the Ethereum Merge.

The Merge moved Ethereum from the Proof-of-Work mechanism the Proof-of-Stake mechanism by merging the Beacon Chain with the Mainnet, making it more energy efficient and fewer resources dependent.

Merging the Beacon Chain with the Ethereum Mainnet in September 2022

Regardless of its positive side, it is occupied with room for improvement. Ever since the start of the Merge, having Beacon chain as its primary blockchain, disabled existing ETH to be withdrawn; Just imagine having your digital asset frozen on a specific platform. This is where the Ethereum Shanghai Upgrade comes in.

More than 16 Million Eth locked in Beacon Chain Smart Contract

If you are already staking Ethereum, you would know that it is a one-way street relationship because you can stake your Ethereum but you cannot withdraw your tokens. And to date, there is 16M ETH staked in the beacon chain, this is roughly US$ 25.1 Billion at the point of writing Now, with the Shanghai Upgrade, these ETH can be withdrawn by its owners, which is one of the biggest factor why developers are pushing for this since the onset of The Merge.

When is Ethereum Shanghai Upgrade?

The Ethereum Shanghai Upgrade is set to roll out in March 2023. But before that happens, the Shanghai Public Testnet will happen in the month of February 2023.

What to do for Ethereum Shanghai Upgrade?

If you are not staking Ethereum, there is nothing you need to do. But watch out for scams that may arise in the next few months. When The Merge happened in September 2022, many of the classic trust trade scams happened, where users are told to send the scammer Ethereum in exchange for the new tokens.

Watch out for phishing scams that will arise when such forks are happening.

Will the price of Ethereum rise after Shanghai Upgrade?

This is probably one of the most important questions that many would have in their minds. Since withdrawals will be enabled there are 2 possible outcomes.

The first scenario is when all the staked Ethereum is withdrawn which could lead to users selling their Ethereum for cash flow or liquidity, which can lead to a dip in the Ethereum prices.

The second scenario is a pump in the prices of Ethereum because now holders of Ethereum have more confidence staking Ethereum with the knowledge that they can withdraw Ethereum at any point in time.

When this happens, it might lure more holders to stake Ethereum, currently at a ~4-5% APY, which can give an uplift to prices for Ethereum.

Where to buy Ethereum?

Buying Ethereum is not hard, there are 2 options to pick from, Via Coins.ph or Coins Pro!  Both platforms are safe, secure, and regulated in the Philippines.

Via Coins.ph Buy & Sell Crypto Portal:

  1. Step 1: Log in through your Coins.ph account, and if you still haven’t downloaded the app, you may download it at App Store or Google Play.
  2. Step 2: Cash in any amount you would like to through your Coins.ph wallet.
  3. Step 3: You may now purchase $ETH tokens as part of your crypto portfolio.

Via Coins Pro, BSP Licensed Spot Exchange:

  1. Step 1: Log into your Coins Pro account and click [Balance].
  2. Step 2: Select the currency you want to deposit, click on [Deposit] and enter your desired cash-in amount.
  3. Step 3: Select ETH/PHP pair and enter the [Order Quantity]  you would like to trade.
  4. Step 4: Click Buy or Sell to place your Limit and Stop Orders.
  5. Step 5: Wait for your order to be filled

Where can I stake Ethereum?

Staking is participating in the proof of stake mechanism which rewards users for holding the token supporting the network. One of the key strategies for earning passive income on the Ethereum Network is through staking.

Currently, the two most popular DeFi staking protocols for liquid staking Ethereum is Lido Finance and Rocketpool. There platforms do carry their own risk thus, always do your own research before putting any funds into any protocol.

Disclaimer: The information and publications in this article are not intended to be and do not constitute financial advice, investment advice, trading advice, or any other advice or recommendation offered or endorsed by Coins.

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Sign up for a Coins.ph account now to start trading OR download the Coins.ph app. Once you have verified your account, you can convert PHP into the cryptocurrencies of your choice.

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