The primary focus of the Shanghai upgrade is to enable stakers to withdraw their staked ETH tokens. Since the launch of the Beacon Chain in December 2020, ETH holders had been locking up their tokens on the Beacon Chain. The Merge upgrade in 2022 did not include the ability to withdraw staked ETH, creating uncertainty among investors and stakers.
With the certainty of the ability to withdraw, investors and stakers may free up their ETH for other opportunities. However, a withdrawal queue is in place, limiting the number of ETH withdrawals to only six validators per epoch. The protocol allows approximately 43,200 ETH withdrawals per day after the Shanghai upgrade, and it may take up to 300 days for all stakers to withdraw their staked ETH tokens.
Ethereum developers removed some Ethereum Improvement Proposals from the Shanghai upgrade, including “proto-danksharding,” which is the first of Ethereum’s two-part process to implement sharding. The sharding upgrade is expected to roll out over 2023 and 2024 and will split up Ethereum’s workload across small chains working in tandem, making the blockchain faster and more scalable.
The Ethereum Shanghai upgrade is a significant milestone for the Ethereum network, allowing investors and stakers to withdraw their staked ETH tokens. While it may take time for all stakers to withdraw their tokens, the sharding upgrade, expected later this year, will further enhance the Ethereum network’s scalability and speed.
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