The upcoming Shanghai upgrade is one of the most awaited developments in the crypto industry in recent weeks. As Ethereum, Web3, and DeFi enthusiasts eagerly await the rollout of this next major upgrade, this post gives you a glimpse into the road ahead and what comes next.

But first, before we begin, let’s give you some background on Ethereum 2.0 and look back at all the milestones achieved in the roadmap.

Ethereum 2.0: A Recap

Ethereum is the largest ecosystem of decentralized applications (dApps), paving the way for significant innovation in the blockchain industry. The pioneer in the industry to introduce smart contracts on a blockchain network, Ethereum has paved the way for several groundbreaking trends in today’s market - decentralized finance (DeFi), non-fungible tokens (NFTs), GameFi, metaverse, and Web3. It’s also one of the powerhouses that have the potential to take blockchain technology mainstream.

However, developers and users’ rising adoption of the Ethereum blockchain strained the infrastructure, causing a surge in network congestion and transaction costs. Furthermore, Ethereum was criticized for its high energy consumption due to its use of the Proof-of-Work (PoW) consensus mechanism.

Supporters of Ethereum and developers at the Ethereum Foundation soon realized the need to make a radical shift in operations, one that would make the leading ecosystem for dApps more sustainable, scalable, efficient, and ready for real-world applications. And that’s where the idea for Ethereum 2.0 was born - a series of much-needed upgrades that would make the Ethereum network more scalable, secure, and sustainable. This transition is referred to as the Ethereum 2.0 roadmap and has been a major focus of the Ethereum community in recent years.

2020: Beacon Chain Genesis

In December 2020, the Beacon Chain - Ethereum’s PoS network started producing blocks, marking the first official step in the Ethereum 2.0 journey. Bringing Proof-of-Stake (PoS) consensus to Ethereum’s ecosystem, the Beacon Chain introduced the consensus logic and block gossip protocol that has since secured the Ethereum network.

2021: Berlin, London, Altair, and Arrow Glacier

The Berlin upgrade rolled out in April 2021, optimizing gas fees for specific EVM actions and increasing support for multiple transaction types. This was followed by the London upgrade, which introduced Ethereum Improvement Proposal 1559 (EIP-1559) in August. It drastically changed Ethereum’s transaction fees, including how gas refunds were handled.

The next major network upgrade in the Ethereum 2.0 roadmap was Altair, which occurred in October 2021. Altair was the first scheduled upgrade for the Beacon Chain and added support for “sync committees” that enabled light clients, increased validator inactivity, and slashed penalties. This was followed by the Arrow Glacier upgrade in December 2021, which pushed back the difficulty bomb by several months.

2022: Gray Glacier, Bellatrix, Paris, aka The Merge

The Gray Glacier network upgrade in June 2022 pushed back the difficulty bomb by three months. The Bellatrix upgrade, the second scheduled upgrade to the Beacon Chain, occurred in September 2022 and prepared the network for The Merge.

One of the biggest developments involved migrating the Ethereum blockchain from a PoW consensus to PoS, and this development was called The Merge, which took place in September 2022. Also known as the Paris upgrade, it switched off Ethereum’s PoW mining algorithm and switched on PoS consensus on the Ethereum mainnet.

Before this upgrade, the Beacon Chain shipped separately from the mainnet and ran parallel to it. The Merge brought the two layers together, making Ethereum a PoS network where validators who staked ETH became responsible for generating blocks instead of miners with expensive energy rigs.

2023: Shanghai Upgrade

The forthcoming Shanghai upgrade, scheduled for approximately April 12, 2023, is the next significant update for Ethereum. This update, known as EIP-4895, will enable ETH validators to unlock their staked ETH within the network. As a result, staked ETH and associated rewards will become accessible, considerably increasing ETH liquidity in the cryptocurrency market.

Simultaneously, the Beacon Chain will experience a Capella upgrade during the Ethereum Shanghai update. This Capella upgrade will allow validator nodes with staked ETH to fully prepare for the Shanghai upgrade by updating their withdrawal keys and broadcasting this information following the Beacon Chain's Capella upgrade.

The Next Phase in Ethereum 2.0: Danksharding

The third significant upgrade stage, known as Danksharding, will bring horizontal database scaling to the forefront. This enhancement will distribute the responsibility of managing vast data generated by layer 2 rollups.

Previously, it was expected that Ethereum would implement sharding capabilities as part of its Ethereum 2.0 journey. However, an update on 5 April 2023 on its official website clarifies that developers will no longer consider introducing shard chains or sharding to the Ethereum network.

The Ethereum roadmap has been updated to focus on Danksharding as the next upgrade milestone. Unlike the traditional sharding model that aims to split the blockchain into multiple networks, Danksharding will use distributed data sampling across blobs to make Ethereum more scalable. Also known as data sharding, this feature is easier to implement on the blockchain than conventional sharding.

Consequently, the upgrade will decrease data storage costs by minimizing hardware requirements, empowering anyone to become a validator. This increased accessibility will lead to greater decentralization and enhanced security.

EIP-4844: Proto-Danksharding

This development, which is dubbed EIP-4844 or Proto-Danksharding, focuses on addressing Ethereum’s scalability by increasing transaction volume on the network. EIP-4844 suggests creating a temporary solution to Ethereum’s network congestion woes by increasing the block size by 2 MB, reducing gas fees for the network’s users, and making it more efficient.

The innovative concept of Proto-Danksharding revolutionizes blockchain technology by introducing temporary data blobs that can be seamlessly transmitted and linked to blocks. This update will let Ethereum users experience the benefits of inaccessible data to the EVM, ensuring automatic deletion within a set timeframe (1-3 months). They can also enjoy significant cost reductions for rollups, ultimately providing end users with more affordable transaction options.

Full Danksharding

Danksharding is the ultimate evolution of rollup scaling that originates with Proto-Danksharding. When it is implemented, Ethereum users can experience unparalleled network capacity as Danksharding enables massive storage space for rollups to store their compressed transaction data effortlessly. This upgrade will also offer seamless support for hundreds of individual rollups, making millions of transactions per second a tangible reality on the Ethereum network.

Expected Timeline

Although empowering Ethereum with complete Danksharding capabilities could take several years, Proto-Danksharding could arrive sooner. EIP-4844 is in a mature stage, with agreed-upon specifications.

On the clients’ side, prototypes are already implemented, testing is currently underway, and the proposal is getting production-ready. As a next step, after the Shanghai update concludes successfully, these changes could be implemented in a public testnet and refined before being rolled out. Some experts say Ethereum could get sharding capabilities in 2023-24.

Sharding is one of the critical features of Ethereum 2.0 that will enable it to achieve these goals by breaking the blockchain into smaller, more manageable parts. The ultimate goal of Ethereum 2.0.- the major upgrade to the blockchain, will see Ethereum become a formidable force that powers the global web3 movement. Making the blockchain more energy efficient, faster, and cheaper could drive higher interest in its mainstream adoption once sharding is added and the upgrade is completed in the coming months.

Read more: https://www.kucoin.com/blog/ethereum-2-0-roadmap-next-after-shanghai-upgrade