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The Ethereum Upgrade: Everything You Need to Know About Shanghai-Capella

Validated Individual Expert

This month, Ethereum will undergo the “Shanghai-Capella” upgrade, the largest network upgrade since the “Ethereum Merge” in 2022.

“Shanghai-Capella” will enable the withdrawal of staked ETH from the Ethereum blockchain, completing its transition from a proof of work to a proof of stake network.

The upgrade promises to usher in a new era of scalability, sustainability and mainstream adoption for Ethereum, but what does it mean for everyday users of Ethereum? Find out below:

When did Ethereum start its transition from a proof of work to proof of stake blockchain?

  • In September 2022, the “Ethereum Merge” successfully upgraded the Ethereum network’s mainnet from an energy-intensive proof-of-work consensus mechanism to the more energy-efficient proof-of-stake. Proof-of-stake lets users stake cryptocurrency to validate transactions, and in turn these users are rewarded for that participation with cryptocurrency.
  • The merge, however, did not offer the ability to let individual stakers withdraw deposited Ethereum (ETH) or the rewards generated by those deposits.
  • This is where the “Shanghai-Capella” upgrade comes into play, as “Shanghai-Capella” will finally enable the withdrawal of staked ETH.

Are Shanghai and Capella two different upgrades?

  • Technically, yes.
  • The “Shanghai” upgrade is on the execution side of Ethereum, whereas Capella is the upgrade on the consensus side — taking place straight afterwards.

I haven’t staked Ethereum but I do trade Ethereum, does this mean for me?

  • Unless you have engaged with Ethereum staking, the upgrade will not change the way everyday users interact with Ethereum.

I have staked Ethereum, how will this impact my Staking account?

  • You can continue adding to your Blockchain.com Staking Earn Account, but for the first time you will be able to withdraw assets.
  • We expect withdrawals from your Blockchain.com Staking Earn Account to be available a few weeks after the Ethereum upgrades are complete as the time taken to process withdrawals is set by the Ethereum protocol (not Blockchain.com).
  • Remember, you remain liable for any taxes in relation to your Staking or other crypto products.

While the upgrade is a huge advance forward for those who stake and the Ethereum network at large, the upgrade will have little impact upon how everyday users interact with Ethereum or the economics of the network itself.

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