The Ethereum Upgrade is Now Imminent

One of the biggest upgrade of the ethereum network in seven months is to go out in just hours according to estimates of Shapella activation.

Shapella, standing for Shanghai and Capella, is to upgrade the Beacon chain and the execution layer to primarily unlock the staking eth.

That brings the transition to full Proof of Stake (PoS) to its final stage some eight years since plans were announced for this development.

As the unlock of eth might bring new circulating supply to market, it is a big event for traders too who have been speculating for months just how the unlock may affect prices.

About 15% of eth’s supply is currently staking, though some expect only 170,000 eth out of that ◊18 million will be withdrawn.

Currently there are 4,000 validators who have already exited. At 32 eth each, that makes it ◊128,000 who have already joined the queue to withdraw, worth about $250 million.

Whether that’s the end of it is to be seen as ethereum’s staking amount becomes volatile, rather than only up as it has been so far.

Yet, the unlock may allow for the actual re-pricing of eth’s transformation to full Proof of Stake, which has not quite been reflected on its ratio against bitcoin.

One reason may well be that investors did not have enough information on the real change to circulating supply by the PoS upgrade slashing block rewards 90% from circa ◊20,000 a day to just ◊2,000.

The anticipation for this upgrade therefore may have held back demand and pricing in. Now that it is almost here, expected to go out at midnight in Europe in about five hours, it may bring some temporary volatility, but it may clear the way for a proper pricing of eth.

The market reaction has been muted so far with eth continuing to trade above $1,900. Participants are probably not sure whether the upgrade is bullish or bearish in the short term, and so price hasn’t quite been volatile so far.

Whether that will change remains to be seen, but at a technical level this is a huge milestone for the network that has taken almost a decade and completes one of the most important phase of eth.

That means ethereum is getting closer to its final form at the base layer, with the real action so moving to second layers.

The following upgrade, protoDankSharding, will focus on those second layers too as despite its complex name, that conceptually simple upgrade will primarily add a new transaction format that can be pruned for second layers.

The years of when therefore have the answer of now, so ending a stage, to open a new and potentially a more exciting one: the unknown frontier and exploration of zk-tech scaling.

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• Source: https://www.trustnodes.com/2023/04/12/the-ethereum-upgrade-is-now-imminent