Check out main changes that new update will bring to Ethereum
One of the most anticipated updates for the Ethereum (ETH) network was the merge, which started in September 2022 on the altcoin network. The hard fork came about with the intention of bringing a proof of stake (PoS) consensus model to ETH. Now, altcoin investors are waiting for the Shanghai update.
Get to know Shanghai hard fork
Traders have extremely elevated expectations for the update that should take place in 2023. After all, Shanghai will bring liquidity to Ethereum, as the cryptocurrency units that are staking on the Beacon Chain will be released for trading.
This release follows on from the proposed EIP 4895, which will also make the ETH network more scalable.
Still showing its focus on Ethereum’s scalability, EIP 4844 was proposed. At this stage of the hard fork, there will be fragmentation to increase network throughput and reduce transfer rates.
The Ethereum Virtual Machine (EVM) will not be released from Shanghai. Five proposals were made and approved by the developers of altcoins. They will be responsible for making the execution of smart contracts more secure.
On Oct. 18 of this year, a crucial step towars the hard fork was taken. The TestNet version, Shandong, was launched.
How will the price of Ethereum react?
Only time will tell. While there is a general consensus that token issuance will cause investors to sell their cryptocurrency, this may not be the case.
First, with attractive rewards on ETH staking, the choice may be made to leave the altcoin locked to help with network validation and still earn passive income.
Furthermore, Ethereum is not just any altcoin but the most prestigious one on the cryptocurrency market.
Investors who staked ETH are also the ones who trust the cryptocurrency and placed their bet long before the Merge happened. The possibility of them wanting to dump the Ethereum price is also remote.
Lastly, network upgrades are often beneficial for altcoins. ETH’s transition to proof of stake proves this. Although the hard fork was priced and crypto didn’t move much after it arrived, the pre-merge volatility was positive.
To balance this scale, there is a negative point that must be considered. Although the proposals are good, there is no guarantee that they will all be implemented in the hard fork.
The approval of the developers only indicates that they will be present in the testing phase. Therefore, if Shanghai gives less than what the market is expecting, then ETH capitalization could see an improvement.
