What is Ethereum's Shanghai hard fork event?

Ethereum is known as one of the most popular cryptocurrencies in the market. With the potential that it has, it is no longer that surprising to know that there are several developers who have decided to fork something useful from it. 

Throughout the years, there are several amazing projects that have been connected to this asset. Some of them are NFTs, dApps, and even hard forks. With the success of projects like the London Hard Fork and Paris Hard Fork (The Merge), another project has been planned and anticipated in the crypto community. This is called the Ethereum Shanghai hard fork event. 

Since Ethereum is an impressive asset that has been widely accepted on sites like Bitcasino, it is important that people learn more about the projects created with it. That way, they can determine how it can impact their Bitcasino slots or Bitcasino live casino playing experience. 

What are hard forks? 

Hard forks, in terms of blockchain technology, are extreme modifications that render blocks and transactions invalid. These are frequently referred to as backward-incompatible upgrades. 

A hard fork occurs when the nodes of a particular blockchain stop accepting the older versions of the blockchain as a result of new governance principles. These may also be considered as a permanent divergence from its source, in this case, Ethereum. 

What is the Shanghai hard fork? 

The Shanghai hard fork is Ethereum’s major update after ‘The Merge’ in 2022 and after its shift to proof-of-stake mechanism. This upgrade will allow ETH stakers or validators to withdraw their staked ETH from the Beacon chain. 

There are several EIPs that fall under this project, the main one being the EIP-4895. There are several other EIPs under this program. Among them are EIP-3651, EIP-3855, EIP-3950, and EIP-6049. If you haven’t heard about any of them yet, here’s what they are all about: 

EIP-4895

This is the main EIP featured in the Shanghai hard fork. With this, validators can withdraw their staked ETH to secure the network. When Ethereum switched from a Proof of Work (PoW) to a Proof of Stake (PoS) consensus mechanism, the network started using validators rather than miners to add blocks to the blockchain. These validators must stake 32 ETH to take part in the block validation process. 

Before this was pushed through, validators were told that their staked ETH and any collected rewards would be locked up until another chain update is launched. In this case, the said update is the Shanghai hard fork. The validators who have been staking and earning rewards since December 20 up until when Ethereum released the Beacon Chain where they can cash out their assets. 

EIP-3651

This EIP is also called WARM Coinbase and its main focus is to reduce network fees for the network’s key participants who are also called builders. This EIP was called such since the builders use Coinbase to receive new tokens. Aside from that, it is with this EIP that the Coinbase became easier or ‘warmer’ to use since they only require a lower gas fee.

EIP-3855

EIP-3855 suggests adding a new instruction called PUSH0 (0x5f) to the Ethereum Virtual Machine (EVM). This command tries to lower gas and storage costs for contracts that must push constant 0 into the stack. 

EIP-3860

EIP-3860 suggests modifying Ethereum's initcode's maximum size restriction and adding a gas fee for each 32-byte segment of initcode. The programme that is run when a new contract is created is known as the initial code. This EIP proposes to extend the maximum value for initcode from the existing 24576 bytes to 49152 bytes. The maximum contract size would increase with this upgrade, and contracts would be able to include more advanced capabilities. 

EIP-6049

This EIP suggests discarding Ethereum's current ‘SELFDESTRUCT’ opcode and substituting it with a new opcode called ‘halt’. It is a more controlled function that increases the security and dependability of smart contracts in Ethereum. 

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Is it important? 

The Shanghai hard fork is an important proposal in the Ethereum network, especially for the validators who want to cash out their rewards they’ve earned over the past two years. In a way, this will also give them more control over their funds since the industry may have caused several uncertainties throughout the past year. 

Aside from accessing locked up assets, the PoS Blockchain doesn’t have all of its features available since it went online. Even though the blockchain is now operational, stakers are required to make a commitment to keep their money locked in to maintain Ethereum's functionality. 

With the special mechanism that will release the staked ETH, the PoS blockchain will be made more possible and practical. This means that stakers will now have complete control over their funds and they also have the chance to determine how they wish to spend their rewards.

Will it really make unstaking ETH possible?

Given the fact that the Shanghai hard fork also allows validators to unstake their ETH assets, many wonder about how they can do it. Technically speaking, there are two ways on how you can unstake the ETH once this hard fork goes live.

The first step is to create a ‘withdrawal credential’ which can unstake all of your rewards immediately. Meanwhile, the second step involves having your validator voluntarily issue a message announcing its removal from the blockchain. This will allow them to leave the Beacon Chain and unstake all 32 ETH. Despite the fact that validators are allowed to pull out, this doesn’t pose a threat to the entire Ethereum community since the likelihood of having everyone leave is slim. 

Still, validators have to keep in mind that there will be a waiting time that they have to endure before they can claim the ETH they have chosen to unstake. The reason behind this is that there’s only a single queue for all transactions on the blockchain. Therefore, the network only has a capacity of processing 16 partial withdrawals at the time. Still, this might change with some future improvements. 

Why is it being implemented now? 

The reason as to why this is already being implemented is to make staking better and worthwhile for the validators who have been waiting for a while. With the launch of this hard fork, the validators will know that the network stays true to its promise that they can finally get to cash out their rewards after this major upgrade. 

Will it impact ETH prices?

Crypto traders continue to watch crypto market trends as a new era of ETH begins. This is one of the ways on how they can tell the impact of Shanghai hard fork on the market. It also includes watching all bullish and bearish movements that it may cause. While some traders think that the upgrade would stimulate more staking, some claim that Shanghai might start a selling wave, with many people taking profits once staked ETH is unlocked.

Once Shanghai becomes operational, there will be around 1 million ETH worth of rewards that will be available for withdrawal. Although it is yet unclear which way what trend it might bring,  traders have to keep an eye on how much of the available ETH will be cashed out, as this might lower the price of ETH.

What does it mean for Ethereum? 

The future of Ethereum encompasses far more than just the move to proof of stake. In an effort to make sure that this will be a successful upgrade, Shanghai's developers made the choice to keep the project's scope modest, primarily to expedite the distribution of staked ETH withdrawals. They did this by carefully examining the adjustments that they think the network would need instead of rushing into modifying it. 

In line with this, there are some changes to the network which were intentionally not included from Shanghai as it is meant to be pushed to the third quarter of the year. Among these is ‘proto-danksharding’ which is a term that describes a technique for scaling the blockchain by dividing the network into many chains, or ‘shards’. There are also several changes to the EVM Object Format (EOF) that are also in the works.

If the scalability objectives are met and the projects become successful, there is a great chance that Ethereum becomes the financial system of the future. This also means that its market value might increase. 

These are just some of the few facts that you have to learn more about the Shanghai hard fork and what it means to the community. By having a better understanding of this and the possible effect that it can make, it can be more enticing to know each aspect of the upgrade to understand how it can make the entire network better. 

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