Ethereum, the second-largest cryptocurrency by market capitalization, has completed its long-awaited proof-of-stake upgrade — as you’ve likely heard about in the news.

This upgrade to the Ethereum blockchain brings with it several critical Ethereum Improvement Proposals (EIPs) that address important issues like reducing gas fees.

What is the Shanghai Fork?

The Shanghai fork, also known as the “Shapella” fork, is an upgrade to the Ethereum blockchain that implemented EIP-4895. This proposal allows validators to withdraw ETH that has been staked since as long as December 2020.

About 14% of all ETH is currently staked, accounting for 16 million tokens and a current value of over $26 billion.

In addition to EIP-4895, the Shanghai fork includes several other EIPs designed to reduce gas costs for Ethereum developers.

What’s Happened Since the Fork?

Since the activation of the Shanghai fork, the market reaction has largely been enthusiastic. About 4000 people tuned into a Shapella Mainnet Watch Party hosted by Ethereum Cat Herders.

Since allowing redemptions, the number of withdrawals have been relatively muted so far, even though it was predicted pre-upgrade that withdrawals will be en-masse and potentially cause ETH’s price to plummet.

Right now, it takes about 4 days to withdraw from queue, and spreading the withdrawals could dampen the price impact of withdrawals.

With greater clarity over how withdrawals, prices remaining unchanged during the activation of the Shanghai fork saw an increase of 10% in the past 24 hours.

Why is This Important for Ethereum?

A clear withdrawal option for those staked in the Ethereum network is seen by many in the industry to draw greater interest from larger institutional investors to participate in ETH staking opportunities. This upgrade has been a long-awaited feature by the community.

On top of this, the Ethereum community can also look forward to the next major feature EIP-4844, which will aim to enhance the scalability of rollups on Ethereum, further improving the operational capabilities of the Ethereum network.

The Shanghai fork is a significant upgrade to the Ethereum blockchain, and it has already shown promising results in terms of market reaction and interest from stakeholders. With the implementation of EIP-4895 and other critical EIPs, Ethereum is taking important steps towards addressing key issues like reducing gas fees and improving scalability.

While some critics have raised concerns about the potential for centralization with the proof-of-stake consensus mechanism, the benefits of this upgrade cannot be overlooked. The Shanghai fork is an essential step in the continued growth and development of the Ethereum network and the wider world of cryptocurrency.