The Shapella update, previously known as the Shanghai upgrade (see our blog article), has now been implemented as of April 12. The upgrade allows investors to unstake their Ether for the first time since the Merge and SMART VALOR has consequently enabled unstaking and staking rewards will be distributed going forward. Despite this, deposits on Ethereum shot up, with nearly 74,000 ETH deposited since the upgrade went live.
The so-called Shapella upgrade is now complete and there’s been a strong positive price impact on Ethereum’s native token, Ether. Ether climbed in the weeks preceding the upgrade and burst past the $2,000 mark following its completion, the highest price level since May 2022. The upgrade also brought on strong demand for unstaking, most of which was partial, meaning that investors are only seeking to claim their staking rewards rather than unstaking the underlying tokens. Consequently, there are long queues that could take weeks to process.
What is the Shapella update?
Shanghai + Capella = Shapella. Shanghai and Capella are two different changes that occurred at the same time. These upgrades affect the execution layer (Shanghai) and the consensus layer (Capella). As these changes were set to happen at the same time, the community combined their names in a catchy portmanteau.
The upgrade is part of the Ethereum blockchain’s roadmap and is the latest instance of ongoing measures to improve the scalability, security, and sustainability of the network. Last year, Ethereum transitioned to a proof-of-stake (PoS) consensus algorithm, which is more energy-efficient and allows for greater scalability.
So, why Shapella? When you make a transaction on Ethereum, you have to pay a fee to the miners who process it. Previously, you had to compete with other users to get your transaction processed quickly, which can lead to high and unpredictable fees.
The Shapella upgrade aims to make things fairer and more predictable by introducing a base fee for each block of transactions. This fee is determined by the network's congestion level, so it should reflect the actual cost of processing transactions. You can still offer a tip to the miner to get your transaction processed faster, but the base fee will be burned (removed from circulation) instead of going to the miner.
This could have a positive effect on the value of Ethereum over time because it would reduce the supply of cryptocurrency. The upgrade also includes some other changes that could make the network more efficient.
Overall, the Ethereum community is excited about these developments and updates because they represent significant improvements to the network and its capabilities. The upgrade also has the potential to further expand the use cases and adoption of Ethereum in various industries and applications.
As of now, users who staked their Ether on SMART VALOR can now log into their SMART VALOR account, click the 'Staking' tab and press 'unstake’ at the bottom right tab.
Please note: while demand for unstaking is high soon after the upgrade, it may take the protocol weeks or even months to process unstaking requests due to exit queues.