Everything you need to know about the Ethereum Shapella upgrade
The Ethereum Shapella upgrade is right around the corner, promising to enable withdrawals of staked ether on the network for the first time.
The upgrade comes seven months after Ethereum’s core developers activated The Merge and kicked off the network’s transition away from proof of work, with a main goal of reducing the network’s energy consumption and a side effect of switching up its tokenomics. Since The Merge took place, Ethereum’s environmental impact has been massively reduced. At the same time, it has seen a significantly lower emissions rate — resulting in a net decrease in circulating supply due to a transaction-fee burning mechanism.
Both goals have gone to plan, with withdrawals the only remaining issue at hand. If successful, direct ether withdrawals will be available immediately and all major platforms — from decentralized protocols like Lido Finance to exchanges like Coinbase — will have added support for withdrawals within a few weeks. Once this has been done, the network will have finally completed its transition to proof of stake.
What is Shapella?
Shapella is a portmanteau of Shanghai and Capella, referring to two network upgrades that will happen simultaneously. These will upgrade the code on Ethereum’s two mainnet layers: the consensus layer (the beacon chain) and the execution layer.
Since The Merge, ether staking has been a one-way system. You can stake ether, but you can’t withdraw it. Shapella’s goal is to fix this and enable validators and users to unstake their ether on the network.
This crucial upgrade will enable users to access and potentially unstake over 18 million ETH staked on the beacon chain, Ethereum’s consensus layer network.
The main feature of the upgrade is called Ethereum Improvement Proposal (EIP) 4895, which enables validator staking withdrawals on the network. Developers have also planned additional specifications within Shapella to optimize transaction fees for certain activities on the network.
Ethereum developers have successfully tested the Shapella upgrade on public test networks for many months. It is set to occur on mainnet epoch 620,9536, expected at 6:27 p.m. EDT on April 12.
See more: First BNB Greenfield testnet goes live, community calls for builders to revolutionize data ownership
How will withdrawals work?
Shapella will activate two types of withdrawals: partial and full withdrawals. Partial withdrawals will allow validators to access their balance over the 32 ETH needed to establish a validator node. In every Ethereum block, 16 validators can make partial withdrawals, and users collect their rewards at the end of each week.
Full withdrawals will be a more significant event to track, as they enable validators to completely exit their stake on the beacon chain, taking their entire ETH balance, including their original 32 ETH and any accrued rewards or penalties each epoch.
Once withdrawals go live, users will not be able to unstake or exit all at once, as there will be a limit on the number of validators that can withdraw each day in a queue.
“In a period where liquidity is at the forefront of our minds, it is important to note that users can withdraw their rewards without removing their stake. Ethereum’s stability is further insulated by the fact that removals are processed in a queue, only happening gradually if there is large withdrawal demand,” said Ken Timsit, managing director of Cronos Labs, the developer of Cronos blockchain.
Source: The Block
