Key Takeaways
The Ethereum Shanghai upgrade (EIP-4895) launched on April 12, 2023, enabling staked ETH withdrawals for the first time since the Beacon Chain, the first phase of the proof-of-stake transition, launched in December 2020.
Before Shanghai, ETH staked on the Beacon Chain was locked with no way to withdraw, making staking a long-term, illiquid commitment.
After Shanghai, the percentage of ETH being staked rose significantly, climbing from roughly 14% at the time of the upgrade to over 27% by early 2025 and exceeding 32% by mid-2026.
The upgrade was part of a series of planned improvements to Ethereum, alongside the Merge (September 2022), Dencun (March 2024), Pectra (May 7, 2025), and Fusaka (December 3, 2025).
The word "Shapella" is sometimes used alongside Shanghai. It refers to the combined activation of the Shanghai execution layer upgrade and the Capella consensus layer upgrade at the same time.
Introduction
The Ethereum Shanghai upgrade resolved one of the longest-standing limitations of the network's staking system: the inability to withdraw staked ETH. For anyone who staked ETH after the Beacon Chain launched in December 2020, Shanghai marked the moment their funds became accessible again. Understanding what the upgrade did and how it changed the Ethereum ecosystem is useful context whether you are interested in staking, holding ETH, or simply following how Ethereum has evolved.
What Is the Ethereum Shanghai Upgrade?
In September 2022, Ethereum completed its switch to a proof-of-stake consensus mechanism through an event called the Merge. This replaced the previous proof-of-work model and allowed users to participate in block validation by staking ETH rather than using specialized mining hardware.
However, a key feature was missing at launch: stakers had no way to withdraw their ETH once locked. Users who staked 32 ETH to operate validator nodes had to accept that those funds would remain locked for an indefinite period. The Shanghai upgrade, formally known as EIP-4895, resolved this by adding withdrawal functionality to the protocol.
The upgrade activated on April 12, 2023. On the same day, a complementary change called Capella was applied to the Ethereum consensus layer. The two changes together are sometimes referred to as Shapella. From this point on, stakers could exit their validator positions and reclaim their ETH.
What Is Ethereum Staking?
With Ethereum's move to proof-of-stake, users can lock ETH to run validator nodes that help secure the network and process transactions. Validators are selected to propose and attest to new blocks, and they receive ETH rewards for doing so. The minimum required to run a solo validator node is 32 ETH.
Users who don't have 32 ETH, or who prefer not to manage validator software directly, can participate through staking pools or liquid staking platforms, which aggregate funds from multiple participants. These options were already available before Shanghai, but the lack of withdrawal functionality on the base protocol made some users cautious about staking at all.
What Are Ethereum Improvement Proposals (EIPs)?
Changes to the Ethereum protocol are proposed and documented through Ethereum Improvement Proposals. Anyone can draft an EIP by following the submission format and presenting it to the developer community for review. Technical changes must reach consensus among core developers before being included in a network upgrade. The Shanghai staking withdrawal feature was specified as EIP-4895.
How Did Shanghai Affect ETH Staking?
One concern before the upgrade was that enabling withdrawals might lead to significant selling pressure, as stakers who had been locked in for months or years might choose to exit. In practice, the opposite trend emerged over the following months. The percentage of ETH staked rose from around 14% of total supply at the time of Shanghai to over 27% by early 2025, and continued climbing to exceed 32% by mid-2026.
This suggests that improved liquidity made staking more attractive rather than less, as users who had been unwilling to stake without a clear exit mechanism began participating after withdrawals were enabled.
For holders of liquid staking tokens, Shanghai also changed the competitive landscape. Liquid staking protocols had previously offered a solution to the illiquidity problem, allowing users to receive a tradable token representing their staked ETH.
After Shanghai, the base Ethereum protocol itself offered withdrawal functionality, which reduced one of the key advantages liquid staking had provided. Despite this, liquid staking protocols retained popularity due to the convenience they offer, especially for users staking less than 32 ETH.
For traders, the unlocking of previously illiquid staked ETH introduced new dynamics around potential supply and demand. Over time, the ETH market absorbed the change without the dramatic sell-off some had anticipated.
Where Does Shanghai Fit in Ethereum's Upgrade History?
Shanghai was one of several significant upgrades to Ethereum following the Merge. Together, these upgrades reflect Ethereum's ongoing development toward a more scalable, accessible, and efficient network.
The Merge (September 2022)
The Merge transitioned Ethereum from proof-of-work to proof-of-stake, reducing the network's energy consumption by over 99.9% and laying the foundation for future upgrades including Shanghai.
Dencun (March 13, 2024)
The Dencun upgrade introduced proto-danksharding (EIP-4844), which substantially reduced transaction fees on Ethereum layer 2 networks by introducing a new data structure called blobs. This was a major step toward scaling Ethereum, as it made L2 transactions significantly cheaper and helped reduce L1 gas fees indirectly by offloading data.
Pectra (May 7, 2025)
The Pectra upgrade brought improvements to validator operations and account management. Key changes included compounding validator accounts (EIP-7251), which increased the maximum effective balance for a single validator to 2,048 ETH, improving capital efficiency for stakers, and allowing execution accounts to securely trigger validator exits.
Fusaka (December 3, 2025)
The Fusaka upgrade activated on December 3, 2025, introducing PeerDAS (Peer Data Availability Sampling), which further improved layer 2 scalability by distributing data availability verification across the network. ETH was trading at approximately $3,149 at the time of the upgrade.
The road ahead
As of mid-2026, the Ethereum community is looking ahead to Glamsterdam (Amsterdam-Gloas), the next combined upgrade following Fusaka. These successive upgrades continue Ethereum's trajectory toward greater scalability, lower costs, and improved user experience.
FAQ
What did the Ethereum Shanghai upgrade do?
The Shanghai upgrade (EIP-4895) enabled staked ETH withdrawals for the first time. Before the upgrade, ETH locked on the Ethereum Beacon Chain since December 2020 could not be accessed. After April 12, 2023, validators could exit their positions and reclaim their staked ETH.
What is the difference between Shanghai and Shapella?
Shanghai refers specifically to the execution layer upgrade. Shapella refers to the combined activation of Shanghai (execution layer) and Capella (consensus layer) at the same time on April 12, 2023. Both terms describe the same network event.
Did the Shanghai upgrade cause ETH prices to drop?
A common concern before the upgrade was that enabling withdrawals would lead to large-scale selling of previously locked ETH. In practice, ETH staking participation increased significantly after Shanghai, suggesting the market absorbed any selling activity and that improved liquidity attracted more participants to staking.
How much ETH is staked after the Shanghai upgrade?
As of mid-2026, over 32% of total ETH supply is staked on the Ethereum network, up from roughly 14% at the time of the Shanghai upgrade in April 2023. This growth reflects increased confidence in staking following the addition of withdrawal functionality.
What upgrades followed Shanghai?
After Shanghai (April 2023), Ethereum received Dencun (March 2024, introducing proto-danksharding), Pectra (May 2025, improving validator operations), and Fusaka (December 2025, introducing PeerDAS).
Closing Thoughts
The Ethereum Shanghai upgrade completed a crucial piece of the Ethereum staking system by enabling withdrawals for the first time. Together with the Merge and subsequent upgrades like Dencun, Pectra, and Fusaka, it represents a major step in Ethereum's transition to a fully functional proof-of-stake network. Whether you hold ETH, stake directly, or use a liquid staking platform, understanding these upgrades helps clarify how Ethereum's infrastructure has continued to develop since 2022.
Further Reading
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