Ethereum: Testnet for update Shanghai started, withdrawal of clocked ETH is getting closer

Originally posted here.
By: Stephan Fiedler

Overview

Ethereum wants to make it possible later this month through the update Shanghai to finally be able to withdraw clocked ETH again. A testnet specifically […]

The Post

Ethereum wants to make it possible later this month through the update Shanghai to finally be able to withdraw clocked ETH again. A testnet specifically designed for this purpose has been live since yesterday, Tuesday.

Ethereum (ETH) is about to receive an update that should mark a giant step from the perspective of investors. Because with the Shanghai update, the restriction of not being able to withdraw ETH deposited for staking will be lifted. The possibility of staking ETH was introduced on Ethereum in December 2020 in preparation for the protocol change “The Merge”, which was then implemented in September 2022. To some extent, investors have had to come to terms with the fact that they have not been able to freely dispose of staked Ethereum for more than two years.

But now the wait is nearing its end, for the Shanghai update, the Ethereum testnet Sepolia has been publicly released. If the test run for Shanghai is successful there, the update will be subjected to another final check in the largest ETH testnet Görli. Thus, the previous schedule of adding Shanghai to the Ethereum mainnet in March still seems realistic. The test run that has now started was announced for the end of February, which also worked out at the last minute.

With a good 17 million ETH, around 14 percent of all Ethereum in circulation is currently deposited for staking, so at current market prices, the equivalent of around 28 billion US dollars in capital is affected by the Shanghai update. So it’s not hard to see why developers prefer to double and triple check Shanghai before it goes live money-wise on Ethereum. An exact date for the launch of Shanghai on Ethereum is still pending, but should be communicated in the coming weeks.

By the way, those who have read headlines about Ethereum testnet Görli in recent days need not get restless. At Testnet Görli, the unusual development had occurred that a secondary market had formed for the actually worthless ETH there called GETH. This is not wanted by Ethereum and they are leaning towards phasing out Görli in the near future. Since the Shanghai update is not only being put through its paces in the Görli testnet, even theoretical influences should not be able to hide here.

Conclusion: Will the Shanghai update become a payday for Ethereum?

Market observers are still undecided on whether the Shanghai update could also have a direct impact on Ethereum’s price curve. On the one hand, many of the affected ETH have been parked for staking when Ethereum was trading well below its current price level of around $1,650 – so a payout would be attractive. On the other hand, Lido Finance and other staking pools with “Wrapped ETH” have created opportunities to convert staked Ethereum into liquidity in the meantime – but a run on final payouts had failed to materialize there. In any case, the update should give Shanghai investors back full sovereignty over their staked ETH and thus also clear the way for further updates in the direction of Ethereum 2.0, where especially transaction fees and capacities (keyword sharding) are on the to-do list.