The Ethereum merger, The Merge, carried out in September 2022, is one of the most important advances in the list of goals proposed by Ethereum in its evolutionary timeline.
The Merge ushered in a complete transformation of the Ethereum network from a blockchain based on the Proof-of-Work (PoW) consensus mechanism to a blockchain based entirely on Proof-of-Stake (PoS).
One of the most notable benefits provided by the fusion is the considerable reduction in energy consumed in the process of creating and validating new blocks. The developers estimate that the reduction in network energy consumption since the implementation of The Merge is in the order of 90%, a fact that has made Ethereum a more environmentally friendly blockchain.
Diogo Mónica, co-founder and president of Anchorage Digital, highlighted that the arrival of The Merge has managed to transform Ethereum from “a smart contract platform that was falling behind” to “something that is doing things right”.
This fact is evident in the growing interest of investors and in the debates that are being generated among those who develop this important platform.
Shanghai, the imminent next Ethereum upgrade
Although The Merge successfully achieved an important goal for Ethereum, the blockchain network still has a long way to go to achieve its goals.
As Vitalik Buterin, co-founder of Ethereum, pointed out in July of last year, The Merge has boosted the development of the Ethereum network by up to 55%, so it is a new set of future updates that will complete the development of this blockchain by 100%. Among these updates is Shanghai.
Currently, the crypto community has its expectations focused on the new update announced by the Ethereum developers for next March. Shanghai will allow validators to withdraw ETH staked on the network.
Validator ether withdrawals are one of the most anticipated features on Ethereum and although many are optimistic about the changes coming with the arrival of Shanghai, others have shown some concern.
Overall, an increase in demand for ETH is expected due to new services and staking options that will be available to crypto investors once the Shanghai upgrade is complete. However, Sander Lutz of Decrypt pointed out that there are those who believe that the pressure being exerted by the crypto community is leading developers to implement Shanghai “too soon”, something that could lead to future problems.
Be that as it may, Shanghai is the next update outlined in Ethereum's evolutionary path and has been a priority for the network's developers, who have postponed other important improvements, such as the implementation of the EIP-4844, which belongs to The Surge, for after Shanghai.
What is the importance of this next update?
Through Shanghai, Ethereum opens the possibility for investors to withdraw their ETH staked on the network, along with the rewards they have generated for carrying out this activity.
As mentioned, validator ether withdrawals are one of the most anticipated features on the network, as they have been locked on the blockchain since the launch of Beacon Chain in December 2020. However, the near arrival of Withdrawals are also raising new concerns among investors and users, who consider the possibility that massive withdrawals of ethers by validators may occur and that this may cause serious problems in the operation of the network.
Ethereum will implement withdrawal mechanisms to ensure its stability after Shanghai
It should be noted that validators are responsible for ensure and maintain the stability and security of the blockchain, so the possibility of a massive ether withdrawal occurring is something that the developers already had in mind.
To address this possible problem, the Ethereum development team has implemented mechanisms that allow them to maintain a stable blockchain. If a validator wishes to withdraw their ETH, they must go through a waiting process called “exit queue” that has a “limit” for withdrawal or abandonment of the network, to ensure its stability by controlling the volume of validators who wish to withdraw. leave at the same time.
Once a validator exits the so-called exit queue, it enters a “withdrawal period” that varies depending on the number of validators attempting to withdraw from the blockchain at the same time.
This withdrawal process could take several hours, weeks or even months; all this in order to guarantee the stability of the PoS blockchain.
New improvements being developed in Ethereum
Although the developers are concentrating their current efforts in Shanghai, in order for the implementation of this update to happen on time, there are also other important improvements to the blockchain network that are on the table.
On the one hand there is “The Surge”, a new update with which the EIP-4844 improvement proposal will be implemented to introduce a new type of transaction in Ethereum that will allow the network to be more scalable and accessible. Likewise, developers work on the EIP-3540, also focused on achieving greater scalability in the network and a significant reduction in its commission rates.
Continue reading: Ethereum launches new devnet to test ETH withdrawals before Shanghai
