Ethereum’s next upgrade
Ethereum’s Shapella upgrade finally enabled unstaking, a crucial post-Merge milestone. [Bloomberg via Getty Images]
There’s never a dull moment on the blockchain. Here’s what you need to know this week:
Ether revisited $2,000 after a major upgrade. What the Shapella update means for Ethereum, and the next steps on the blockchain’s roadmap.
Key cryptoverse quotes. Rep. Tom Emmer’s searing remarks to SEC Chair Gary Gensler during a congressional hearing, and reactions to a new stablecoin bill.
Noteworthy numbers. The price tag for a pair of digital Air Force 1s, and other key stats from the week.
RAISE THE STAKES
Ethereum’s Shapella upgrade was a success. What’s next for the blockchain?
Last Wednesday, Ethereum pulled off its second major upgrade in less than a year, known as Shapella. This latest technical milestone — following last September’s Merge — enabled ETH stakers to withdraw locked-up ETH for the first time ever, finalizing the blockchain’s transition to the 99% more energy-efficient Proof-of-Stake (PoS) system for verifying transactions. But Ethereum still has an extensive roadmap of improvements ahead, including updates that will enhance its scalability, security, and usability.
Here’s a breakdown of how ETH’s price reacted to Shapella and what’s coming next on its roadmap.
How has ETH’s price responded since the upgrade?
In the days since the upgrade, ETH has risen roughly 10%, hovering above $2,000 for the first time since May 2022. This came as a surprise to some analysts who believed that ETH was going to face major selling pressure after the upgrade, due to pent-up demand for withdrawals; ETH staking was first introduced in December 2020, and more than $32 billion was locked up before Shapella went live.
Why hasn’t there been a surge of ETH withdrawals?
Less than 5% of the total staked ETH has been withdrawn since April 12. Stakers are potentially staying put for a significant, yet simple, reason: about half of the nearly 18 million staked ETH is operating at a loss and holders are likely hesitant to withdraw and sell in the red.
Excessive sell pressure and withdrawals were also constrained by limits on how many withdrawals can be processed by Ethereum’s network at a time. Currently, 800,000 withdrawals can be processed per week. Additionally, staked ETH is just 15% of ETH’s circulating supply, compared to a 60% average for other PoS networks, leading some to believe there will actually be a surge in staking, not withdrawals.
What’s coming up on ETH’s roadmap?
The final transition to PoS is just the first of many post-Merge network improvements that aim to make Ethereum more usable and scalable. Ethereum creator Vitalik Buterin has outlined several of the blockchain’s next (rhyming) phases:
The Surge, tentatively scheduled for late 2023 or early 2024, will increase Ethereum’s scalability through a practice called “danksharding,” which essentially divides large pieces of data into smaller ones, allowing more transactions to be processed. Buterin’s goal is for Ethereum to be able to process 100,000 transactions per second, up from about 30 right now.
The Scourge is the most recent addition to the roadmap, and it involves improvements that would prevent censorship of transactions and exploitative bot-driven trading. Both are seen as centralization risks for Ethereum, which is a decentralized network.
The Verge refers to technical upgrades that will allow users to become network validators — computers responsible for verifying ETH transactions — without having to store massive amounts of data.
The Purge will remove old network history to ease bottlenecks and further reduce the amount of hard drive space required for validators. This means that services like Etherscan, which makes it easy to access historical data on the network, will be expected to take on the responsibility of storing older data.
Why it matters… The second major network upgrade in less than a year is a monumental accomplishment for Ethereum, especially after years of delays leading up to the Merge. Now, all eyes will turn to whether the forthcoming upgrades can fulfill Vitalik Buterin’s vision of Ethereum as a “fully scaled, maximally resilient platform.”
TAKES
Gary Gensler gets grilled, Shaq gets served, and more notable quotes from the cryptoverse
Hot seat… “SEC rules make no sense for blockchain companies. You've been an incompetent cop on the beat," said Rep. Tom Emmer (R-MN) to SEC Chair Gary Gensler during a tense hearing held by the U.S. House Financial Services Committee about the SEC’s strategy of regulating crypto via enforcement. Crypto proponents in Congress were especially critical of Gensler for supposedly operating outside the regulatory authority of the SEC in the absence of a comprehensive crypto regulatory bill.
Saga genesis... “I can’t remember the last time I went to anything but a phone ….everything I do, I start with my phone, except for web3,” was how the lead software engineer at Solana Mobile explained one of the core use cases for the Solana Saga, a new Android phone from Solana Labs which comes integrated with web3 functionality. (Read Decrypt’s review of the Saga smartphone.)
Stable thoughts… “While comprehensive, there are clearly open and challenging issues with the bill as proposed, and now is the time for our country and political leaders to really dig in and get this right,” was Circle CEO Jeremy Allaire’s reaction to the U.S. House Financial Services Committee’s recently released draft of a stablecoin bill, marking the first piece of major crypto regulation to be proposed in 2023.
You got served… “Basically, the largest man is hiding from our lawsuit,” was how lawyers described their unsuccessful efforts to serve legal papers to former NBA star Shaquille O’Neal as part of a class-action lawsuit against celebrities who had promoted FTX. O’Neal, who is named in the suit alongside A-listers like Tom Brady and Larry David, was finally reached this week after what the plaintiff’s lawyer alleged was “months of running from us.”
NUMBERS TO KNOW
$104 million
The amount of money investors moved into institutional Bitcoin funds last week, according to a Monday research report from CoinShares. The report said the move into BTC represented an ongoing “flight to safety” amid traditional finance’s persistent challenges.
$500,000 - $1 million
The estimated amount that Donald Trump earned from sales of his Trump-branded NFT collection, according to a filing from the U.S. Office of Government Ethics. The NFTs — featuring the former president photoshopped into various costumes — saw a 462% spike in sales in the hours after his arraignment earlier this month.
75%
Percentage of crypto holders who also reported holding NFTs, according to a recent survey by CoinGecko and Blockchain Research Lab. While the majority of NFT-owning respondents reported buying their first digital collectible in 2021 during the hype of the bull-run, an impressive 27% said they purchased their first NFT in 2022, even as market conditions deteriorated.
$19.82
Price of an Our Force 1 NFT from Nike, the sneaker giant’s latest foray into virtual collectibles since launching their .SWOOSH web3 platform last November. .SWOOSH members will be able to buy digital shoeboxes that will eventually unlock digital versions of Air Force 1 sneakers (the price tag commemorates the iconic shoe’s debut in 1982.) Notably, the brand initiative stays away from the phrase “NFT,” trading crypto lingo for words like “collectible” and “creation.”
DISCLAIMER
This material is the property of Coinbase, Inc., its parent and affiliates (“Coinbase”). The views and opinions expressed herein are those of the author and do not necessarily reflect the views of Coinbase or its employees and summarizes information and articles with respect to cryptocurrencies or related topics that the author believes may be of interest.
TOKEN TRIVIA
Which of the following is a decentralized exchange?
A
Coinbase
B
Lightning Network
C
Uniswap
D
Polygon
Find the answer below.
Trivia Answer
C
Uniswap
