The Shanghai upgrade is a set of changes to the Ethereum protocol that will allow users to withdraw or withdraw their staked ether (ETH).
Prior to the Shanghai upgrade, all ETH dedicated to staking remained locked in the Ethereum blockchain. The Shanghai upgrade will include a change to the Ethereum protocol that allows this staked ETH to be unlocked for the first time.
Shanghai is the first major change to the Ethereum blockchain following its transition from a proof-of-work consensus mechanism to a proof-of-stake consensus mechanism.
This transition process, known as Fusionlaid the technical foundation for future Ethereum blockchain scalability improvements.
Have more questions about Ethereum’s transition from proof-of-work to proof-of-stake? Discover our Beginner’s Guide to Ethereum Merging.
What will the Shanghai upgrade include?
There are currently four Ethereum Improvement Proposals (EIPs) included in the Shanghai upgrade:
The most notable of the changes is EIP-4895.
This EIP allows users who have staked their ETH to maintain Ethereum’s new “Beacon Chain” proof-of-stake to withdraw or “disengage” their funds for the first time.
On December 8, 2022, the Ethereum core team held a All Core Developers (ACD) meeting. The Ethereum team has agreed to target March 2023 as the release date for the Shanghai mainnet launch. However, this is a tentative date based on the assumption that the Zhejiang, Sepolia, and Goerli testnets pass.
Shanghai + Capella = Shapella
A second hard fork will also take place alongside Shanghai, called Capella. That’s why you might see “Shanghai/Capella” or “Shapella” mentioned simultaneously in the run-up to the network upgrade.
Now that Ethereum has a proof of stake chain of execution and a chain of consensus (Beacon string), new changes may require a hard bifurcation of the two layers.
In this case, Shanghai refers to the next hard fork of the execution chain, while Capella refers to the hard fork of the consensus chain.
How the Shanghai Upgrade Affects Kraken Customers
Kraken has no control over the success of the Shanghai testnet or when the Shanghai upgrade may occur. For US customers affected by the The recent Securities and Exchange Commission decision regarding Kraken’s on-chain staking programKraken will return all staked ETH to their spot wallets after the Shanghai upgrade.
After the hard fork, Kraken customers who have staked their ETH will be able to withdraw their assets for the first time. Since there may be high demand over a concentrated period of time from ETH stakers looking to access their coins, the withdrawal may take a few hours. Kraken also has no direct control over ETH unsettlement timelines, as the unsettlement feature works according to the withdrawal conditions set by the Ethereum development team.
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