The Ethereum Shapella Upgrade - the biggest thing since ‘The Merge’
Let's start with a question: Why is it called the Ethereum 'Shapella' Upgrade?
The term refers to two simultaneous upgrades to the Ethereum protocol - the changes to the 'Shanghai' Ethereum Virtual Machine and the 'Capella' consensus layer. When you combine Shanghai and Capella… you get Shapella.
- Developers will be able to unlock staked ETH for the first time since
- It’s expected to lower gas fees for developers
- It should improve the Ethereum network’s scalability
About the ‘Shanghai’ Upgrade
The Shanghai upgrade is made up of four Ethereum Improvement Proposals (EIPs).
- Warm COINBASE (spoiler: has nothing to do with that exchange)
- PUSH0 instruction
- Limit and meter initcode
- Beacon Chain withdrawals
The fourth proposal, EIP-4895, has garnered the most media attention because it promises to enable the withdrawal of staked ETH. Since ‘The Merge’, which refers to when the Ethereum mainnet transitioned from Proof-of-Work to Proof-of-Stake, all staked ETH has been locked on the Ethereum network.
The other proposals bring significant changes too:
- EIP-3651, ‘Warm COINBASE’, will reduce the gas costs associated with COINBASE payments. COINBASE payments are the rewards distributed for adding Ethereum blocks, thus further incentivising Ethereum block builders.
- EIP-3855 and EIP-860 are both related to optimizing smart contracts and making them more secure.
And finally, the ‘Capella’ Upgrade
This is related to EIP-4895, the ‘Beacon Chain withdrawals’ upgrade.
The proposal aims to make the ETH on Ethereum’s Execution Layer (EL) withdrawable by unlocking it from the Ethereum Consensus Layer (CL). The Capella upgrade will result in unlocking all ETH staked on Ethereum’s Beacon Chain, which accounts for approximately 15% of total circulating supply.
The Shapella upgrade is perceived as a major milestone by the Ethereum community.
The proposals outlined above are expected to improve the Ethereum network’s scalability, as well as encourage the wider adoption of staking.
For more information about the Shapella upgrade, check out the Ethereum Foundation’s.