Ethereum will be upgraded to Shanghai on April 12. What is the Shanghai upgrade? What is the impact on the market? Here, I will explain to new friends what the "Ethereum Shanghai upgrade" is in plain language. After reading this, you can popularize it to friends who don't understand it~
The Ethereum Shanghai upgrade is an important update to the Ethereum network, with the main purpose of providing a withdrawal function for Ethereum's Proof of Stake (PoS) mechanism. Prior to this, Ethereum completed the transition from the Proof of Work (PoW) consensus mechanism to the Proof of Stake (PoS) consensus mechanism, and users can participate in network verification by staking 32 ETH. However, the staked funds cannot be withdrawn before the merger. As a network hard fork, the Shanghai upgrade solves this problem and allows users to withdraw staked funds.
The impact of the Shanghai upgrade on the crypto market may be manifested in the following aspects:
ETH price fluctuations: Some people believe that as the staked ETH can be withdrawn, the liquidity in the market will increase, which may cause the stakers to sell some of their ETH, leading to a decline. However, I don’t think so, because the exchange rate between stETH and ETH is basically maintained at 1:1, and those who wanted to launch it have already launched it, so the impact on the price is likely to be very small.
Improve the attractiveness of the Ethereum ecosystem: The Shanghai upgrade makes Ethereum's PoS mechanism more complete and improves the attractiveness of the Ethereum ecosystem. This may encourage more developers and users to join the Ethereum ecosystem and promote its development.
Impact on Liquidity Staking Platforms: The Shanghai upgrade may impact liquidity staking platforms as their unique functionality may be weakened. However, this depends on how users evaluate the trade-offs between staking directly on Ethereum and using a liquidity staking platform.
Improve market freedom: Allowing withdrawal of pledged ETH will help improve market freedom and reduce the effect of human control. This may have a positive impact on the entire crypto market and promote market balance.
Innovation and development of the crypto market: The Shanghai upgrade is likely to drive innovation and development in Ethereum and the entire crypto market. As the Ethereum ecosystem grows, more developers, businesses, and users will benefit from the application of crypto technology.
In short, as an important network update, the Ethereum Shanghai upgrade may have certain impacts on the crypto market. These impacts may include fluctuations in ETH prices, increasing the attractiveness of the Ethereum ecosystem, and affecting liquidity staking platforms.
