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Ethereum Shanghai Testnet May Launch As Early as February to Enable Validator Staking Withdrawal

Ruholamin Haqshanas
Last updated: | 2 min read
Source: AdobeStock / Sergey Nivens

Ethereum developers plan to release a public test network for the Shanghai upgrade, which will include code allowing withdrawals of ether staked in the Beacon Chain since December 2020, by the end of February.

In a call on January 5, Ethereum developers chose March 2023 as the tentative target for the Shanghai hard fork. And in a bid to make sure they meet this date, developers plan to release a public test network for the Shanghai upgrade by the end of February.

During the call, the devs noted that the upgrade will focus exclusively on ETH withdrawals. They also scratched plans to incorporate a set of Ethereum Improvement Proposals (EIPs) dubbed EVM Object Format (EOF), a proposed improvement to the blockchain’s EVM programming environment, due to concerns it could delay Shanghai.

Vitalik Buterin, the Ethereum mastermind, also expressed concerns about the implications of hasting to implement EOF. He said:

“In the EVM, it’s much harder to remove things than it is to remove other features. If we’re going to make a new EVM version, that new EVM version should be designed with the idea of being very forward compatible to all kinds of upgrades that we want to do in the future.”

Christine Kim, a research associate at Galaxy who was on the call, said in a blog post that the current developer test network for Shanghai, which was launched just before Christmas, has already progressed to block 4,000. Furthermore, all Execution Layer (EL) and Consensus Layer (CL) client combinations are currently running on this testnet.

The upgrade has generated excitement among many in the Ethereum community. Since the upgrade will enable withdrawals from Ethereum staking contracts, it will significantly reduce the risk of staking ETH and is expected to convince more users to stake their tokens. 

According to data by Staking Rewards, Ethereum currently has the lowest staking ratio with just 13.79% of all ETH tokens staked. In comparison, other Proof-of-Stake (PoS) blockchains have a significantly higher staking rates, with Cosmos Hub at 62.5%, Cardano at 71.8%, and Solana at 71.4%. 

One major impact of the upcoming Shanghai upgrade will be on liquid staking protocols like Lido and Rocket Pool, which allow users to join ETH staking without running a validator node. In other words, users with less than 32 ETH can join staking using these platforms. 

Therefore, the native tokens of these protocols could see a boost as the upgrade approaches. LDO, the native token of Lido, is currently trading at $1.88, up by 17.5% over the past day. Rocket Pool’s RPL is up by around 15% over the past 24 hours.