Investing.com – Up more than 4% at the time of writing, the best performing cryptocurrency is in the top 10 while trading around $1280.
Like many other cryptocurrencies, including , Ethereum started to climb yesterday at noon. The bullish movement accelerated significantly at the start of the evening. Between 6:25 p.m. and 6:55 p.m., Ethereum went from $1,255 to $1,289 (+2.7%) in less than 30 minutes.
While the reasons for this overall rise in cryptocurrencies remain unclear, the news revealed last night could keep interest in the second-largest cryptocurrency going for months to come.
Shanghai, the next hard fork of Ethereum is scheduled for March 2023
According to a discussion at the 151st Ethereum Core Developer Meeting on December 8, the next “hark fork” of the Ethereum blockchain, codenamed “Shanghai,” could arrive as early as March 2023.
This is the next step in ETH’s roadmap to move from an energy-intensive “Proof-of-Work” (PoW) system to a Proof-of-Stake (PoS) system. This year, the switch from PoW operation to PoS operation was implemented with the “Merge” update.
The merge update replaced Ethereum mining with Ethereum staking. Without going into technical details, we would like to point out that staking can generate returns for anyone who owns ETH if they are part of the staking process.
What will the Shanghai update bring to the ETH network?
While the merger replaced mining with staking, “stacked” ETH (stETH) is currently tied to Ethereum’s beacon chain. And that’s exactly where the Shanghai upgrade will come into play.
After the Shanghai upgrade, stETH users will be able to withdraw their funds and corresponding staking rewards. The Ethereum Foundation said it structured the upgrades this way to “simplify and maximize focus on a successful transition to proof-of-stake.”
Knowing that the Shanghai upgrade will “unfreeze” ETH stakes, there is a risk that validators will mass-sell their ETH stakes once the Shanghai upgrade is implemented. This would result in a sudden supply shock which could cause prices to fall.
However, the ETH protocol imposes a limit on withdrawals of 43,200 stETH per day. With a total of over 10 million, the payouts should not have a significant impact on the price of the cryptocurrency.