Finally, the moment that has been waiting for months has come and the Shapella update has been implemented on Ethereum (ETH).
For the first time since the network transitioned to proof-of-stake (PoS) in September 2022, it released an update that will allow users to withdraw staked ETH tokens.
Here is the reaction of Ethereum price after the update:
Ethereum's Latest Update What is Shapella?
Known as Shapella, the update is a combination of two hard forks: Shanghai and Capella.
Shanghai will enable withdrawal functionality for ETH stakers, while Capella will bring several improvements to the Ethereum blockchain, such as reducing gas fees for developers and enabling token withdrawals.
Shapella marks an important milestone for Ethereum as it marks the completion of unstacking for ETH holders.
Since December 2020, when ETH staking was launched as part of Ethereum 2.0's Beacon Chain phase, users have been able to stake their ETH and earn rewards for securing the network. However, they were unable to stop staking their ETH and access their funds.
Shapella will finally allow users to issue their ETH directly from the protocol without intermediaries or deadlocks. This will give users more flexibility and control over their funds, as well as increase the supply of ETH in the market.
Users developing applications or smart contracts on the Ethereum network will benefit from some of the improvements offered by Capella, such as lower gas fees and token withdrawals. These features will make it easier and cheaper to launch and interact with decentralized applications (DApps) on Ethereum.
Zhuling Chen, CEO of blockchain services company RockX, commented on the Shapella update:
“We think this is actually a game changer. If you think about it, for the first time, Ethereum has a long-term, market risk-free yield curve.”
*Not investment advice.