Ethereum Shanghai (Shapella) Upgrade Has Arrived. What Should You Take Note Of?

After a smooth transition on the Goerli testnet, the next major upgrade, which is known as the Shanghai (Shapella) upgrade is finally coming!

Before we go into what are the purposes and improvements that Shanghai (Shapella) brings to the network, why are these two names chosen? The names are actually referring to Shanghai, which is the city-host of the Devcon 2 conference, and Capella is the brightest star in the northern constellation of Auriga.

Remember previously that Ethereum ran through a hard fork to switch from Proof-of-Work (PoW) to Proof-of-Stake (PoS)? The network consists of 2 layers - execution layer and consensus layer. This next upgrade will happen on both layers:

• Shanghai: Execution layer
• Capella: Consensus layer (Beacon chain)
• Combining both names: Shapella

The network upgrade is expected to be launched on 12 April 2023, and Ethereum validators are finally able to withdraw their staked ETH from the Beacon chain to the execution layer. In addition, the upgrade introduces some new features to the Ethereum execution layer and consensus layer. The specifications are as follows:

1. Shanghai upgrade

This execution layer change includes the "Shanghai" upgrade, which mainly includes:

EIP-3651: Warm COINBASE

• Aims to lower the gas costs that are associated with the maximal Extractable Value payments when accessing the COINBASE address.

EIP-3855: PUSH 0 instruction

• Introduce a new instruction that pushes the constant value 0 onto the stack.

EIP-3860: Limit and measure initialization code & EIP-6049: Deprecate SELFDESTRUCT

• Reduce the fees in other instances

EIP-4895: Beacon chain push withdrawal operation

• Ethereum validators who stacked ETH previously are allowed to unstake their ETH

2. Capella upgrade

The Ethereum v1.3.0-rc.5 specification specifies changes to the consensus layer for the Capella upgrade. At a high level, this upgrade will introduce:

• Full and partial withdrawals for validators
• BLSToExecutionChange message, allowing validators to update their BLS_WITHDRAWAL_PREFIX to ETH1_ADDRESS_WITHDRAWAL_PREFIX, which is a prerequisite for withdrawals
• Independent state and block history accumulators, replacing the original single history roots.

If you currently hold any ETH on an exchange, digital wallets, or any 3rd party services, no additional actions will be needed as the upgrade will be taken on the chain directly.

As for ETH stakers, there are basically 2 methods to withdraw your ETH and rewards:

• Partial withdrawals: Balances in excess of 32 Eth (earned rewards) are withdrawn to an Ethereum address and can be spent immediately. The validator will continue to be a part of the beacon chain and validate as expected.
• Full withdrawals: The validator will exit and stop being a part of the Beacon chain. The entire balance (32 ETH principle and any rewards) of the validator is then unlocked and allowed to be spent after the exit and withdrawal mechanism is complete.

If you are interested in the upgrade, you can watch the Shapella Watch Party live stream right HERE!

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Reference

• https://notes.ethereum.org/@launchpad/withdrawals-faq
• https://cryptopotato.com/what-is-the-ethereum-shanghai-shapella-upgrade-everything-you-need-to-know/
• https://blockcast.it/2023/03/29/ethereum-shapella-upgrade-specification/
• https://cryptoslate.com/ethereum-rises-against-bitcoin-as-shappella-upgrade-nears/
• https://www.tradersdna.com/bitcoin-surges-as-ethereum-shappella-update-is-about-to-go-live/