What Does the Ethereum Shanghai Upgrade Mean for Your ETH Coin?

After Ethereum's move from proof-of-work (PoW) to proof-of-stake (PoS) in 2022, it has kept its promise to improve with another upcoming Ethereum upgrade called the Shanghai Update (EIP-4895).
This huge upgrade comes after the ETH merge and promises to change how things work within the Ethereum network.  

However, with the new upgrade, investors can finally withdraw their stacked ETH (over 16 million ETH), which many investors fear will cause a price spike and decrease.

This article will help you understand the upcoming Ethereum upgrade and how it affects you as an ETH investor.

What is the Ethereum Shanghai Upgrade? 

As of August 2022, Ethereum operated a proof-of-work (PoW) network and used a mining system to validate and process transactions. However, in September 2022, after the Ethereum Merge, the Ethereum network moved to a proof-of Stake (PoS) consensus mechanism, which improved their processes.

With the implementation of PoS, Ethereum users could now take part in validating transactions by staking 32 Ether tokens. The Ethereum's Shanghai update (EIP-4895) is an upgrade that unlocks those staked Ethereum, bringing more Ether into circulation. 

Ethereum developers agreed that April 2023 would be the month to see this upgrade's deployment.

Ethereum Major Upgrade Roadmaps Since Inception

The following are the major Ethereum network updates leading up to the upcoming Shanghai upgrade: 

• Whitepaper Release: 2013 
• Yellow paper Release: 2014
• Ether Sale: 2014 
• Frontier: 2015
• Frontier Thawing: 2015 
• Homestead: 2016
• DAO Fork: 2016
• Tangerine Whistle: 2016
• Spurious Dragon: 2016
• Byzantium: 2017
• Constantinople: 2019
• Istanbul: 2019
• Muir Glacier: 2020
• Staking  Deposit Contract Deployed: 2020
• Beacon Genesis: 2020
• Berlin: 2021 
• London: 2021
• Altair: 2021
• Arrow Glacier: 2021
• Gray Glacier: 2022
• Bellatrix: 2022
• Paris (The Merge): 2022
• Capella: Planned 
• The Shanghai Upgrade: Planned (April 2023)

Understanding Ethereum Staking Relationship with the PoS Consensus 

As part of the Ethereum network consensus mechanism, users can now stake their Ethereum in the PoS mechanism to get more Ether. 

The Proof of Work (PoW) consensus mechanism required more power, wasn't eco-friendly, and incurred high transaction fees. With the PoS, users only need to stake about 32 ETH or less to participate in validating transactions. 

As a validator in the Ethereum network, you are eligible to receive new blocks from other validators in the network. In addition, the Ethereum Shanghai upgrade will allow you to withdraw staked funds in stages from the network. 

How Will The Shanghai Upgrade Affect Stakeholders? 

The effect of the Ethereum Shanghai upgrade depends on the user and their activities on the Ethereum network. The impact of the upgrade on a staker may differ from that of a typical Ethereum user. 

For stakers who staked about 32 ethers directly on the Ethereum network or through fractional staking platforms, they will receive access to withdraw them, but in stages. This ensures no oversupply in the market and manages price action.

What Impact Will the Shanghai Upgrade Have on ETH Traders? 

Lucky for traders, they can access their full cash to decide how to move based on trends following the upgrade. Most traders are also worried about the state of the Ethereum market after the Shanghai upgrade, as questions arise as follows: "How would the new upgrade affect the price of Ethereum?" "Will there be a new coin?"

According to information from Staking Rewards, about 13.81% of all ETH tokens in the network are currently staked on the Beacon Chain. The Shanghai upgrade will allow the withdrawal of these ethers, leading to increased liquidity in the Ethereum market. 

This will lead to price fluctuations that benefit most traders, especially day and swing traders.

What Does the Ethereum Shanghai Upgrade Mean for Investors?

From a long-term perspective, the Shanghai upgrade ensures a more accessible Ethereum market, as ETH holders will have more options to buy and sell. For stakers, there's a more defined method of staking ETH tokens on the network, unlike the past process. 

Apart from the expected price changes, a good side of the Shanghai upgrade is how it would make Ethereum staking more attractive to investors. Many experts predict that demand for Ethereum will rise as investors can stake it directly in the network.

How To Trade The Ethereum Upgrade Potentials

The Ethereum Shanghai upgrade is a huge upgrade coming up on April 12, 2023, and it aims to change the general outlook of the Ethereum network in terms of staking. 

This upgrade from the Ethereum developers should bring many changes, and many expert traders believe the upgrade might boost the price of Ethereum. 

With this in mind, buying Ethereum might be the best thing to do before the upgrade. Yellow Card is a leading crypto exchange in Africa that offers you access to buy ETH with zero fees from your mobile phone.

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