Join the Ethereum Shanghai Upgrade Trading Competition To Share $300,000
Background
Ethereum, although it is veritably the most popular platform for dApps and smart contract deployments, is plagued by scalability issues. Also referred to as the blockchain trilemma, Ethereum has historically had to sacrifice the ability to scale in favor of a more decentralized and secure network. With its initial Proof of Work consensus mechanism, the blockchain was only able to process around 27 transactions per second.
Its transition to a Proof of Stake consensus mechanism through launch of the Beacon Chain and subsequent merge of that chain with its mainnet served as the beginnings of the network’s push for a more scalable Ethereum. With this move, people are able to stake ETH to secure the network. However, up into now, staked ETH could not be withdrawn and rewards could not be distributed.
While staking to secure Ethereum is a worthwhile effort because of the fact that it’s vital to the network, staking without reward takes out the incentive to do so. Incentivization is a cornerstone of decentralized network participation and without a promise of a return, a community likely won’t come together to help build and maintain the network. Hence, the hotly anticipated Shanghai and Capella upgrades (sometimes referred to as Shapella, talked about below).
What will the next upgrade do?
Both the Shanghai and Capella upgrades essentially have the same end result: allowing the withdrawal of staked ETH. They are themselves upgrades to different parts of the Ethereum network. On a slightly more technical level, the upcoming upgrades allows for blocks on the Ethereum blockchain to accept withdrawal requests of staked ETH.
Furthermore, they allow for rewards earned through staking to be distributed to validators as well. Validators can also fully exit, unlocking their entire staked balance.
I thought the next Ethereum upgrade was called Shanghai. So what’s Capella?
Put simply, Shanghai is the upgrade to Ethereum’s execution layer and Capella is the upgrade to Ethereum’s consensus layer.
Poloniex Exchange on Twitter: "#CryptoGlossary 💡 Capella🔹 Refers to the upcoming upgrade to Ethereum's consensus layer.🔹 Ethereum's consensus & execution layers have different names. For the execution - Shanghai. For the consensus - Capella.🔹 Capella/Shanghai will enable the withdrawal of staked ETH. pic.twitter.com/j5MYlY4wSu / Twitter"
CryptoGlossary 💡 Capella🔹 Refers to the upcoming upgrade to Ethereum's consensus layer.🔹 Ethereum's consensus & execution layers have different names. For the execution - Shanghai. For the consensus - Capella.🔹 Capella/Shanghai will enable the withdrawal of staked ETH. pic.twitter.com/j5MYlY4wSu
Poloniex Exchange on Twitter: "#CryptoGlossary 💡 Shanghai Upgrade🏙️ The next major upgrade to Ethereum's execution layer🏙️ Shanghai will allow those that have staked ETH to withdraw it🏙️ This is part of Ethereum's push to improve its scalability and comes after its shift to Proof of Stake#Vitalik #Eth pic.twitter.com/2BCzFbhnGg / Twitter"
CryptoGlossary 💡 Shanghai Upgrade🏙️ The next major upgrade to Ethereum's execution layer🏙️ Shanghai will allow those that have staked ETH to withdraw it🏙️ This is part of Ethereum's push to improve its scalability and comes after its shift to Proof of Stake#Vitalik #Eth pic.twitter.com/2BCzFbhnGg
Capella marks the third major upgrade to the consensus layer, and in addition to allowing blocks to process withdrawal requests, it also comes with an account sweeping function that checks validator accounts for available rewards (referred to as a partial withdrawal) or requests for full withdrawals, which means validators receive their full remaining balances.
I’ve also read about Shapella. What’s that?
If you’re active on crypto Twitter, you might have read about ‘Shapella’. While adding another term that’s being thrown around might seem overwhelming, worry not, because this is just a portmanteau of ‘Capella’ and ‘Shanghai’, and thus refers to the upgrade to both the consensus and execution layers of Ethereum. Often used by Ethereum engineers, Shapella is merely used for expediency when discussing the upgrades and giving progress updates.
When do Shanghai and Capella go live?
Shanghai and Capella go live at the same time: Apr-12–2023 22:27:35 +UTC, according to Ethereum’s webpage on the subject. If you stake through an intermediary like Lido or Rocketpool, there really isn’t anything you need to do. So mark your calendars, and if you haven’t already, read up on the upcoming upgrade with Polopedia:
📌 Shanghai gets a date of release! What you can look forward to and how to prepare.
📌 Ethereum’s Shanghai upgrade: what should we expect?
was originally published in The Poloniex blog on Medium, where people are continuing the conversation by highlighting and responding to this story.
