Ethereum Shanghai: EIP-3651 Will Reduce Gas Prices

On September 15, the Ethereum blockchain experienced perhaps the most significant and biggest update yet with the “Merge” and the related switch to proof of stake. But with “Shanghai,” the next improvement is already around the corner.

Ethereum developers gathered last Friday during its 148th All Core Developers (ACD) meeting following a month-long vacation. The developers talked about the ambitions for Shanghai under the direction of Tim Beiko from the Ethereum Foundation.

Together, they concluded that Shanghai should at the very least involve three small network improvements and the withdrawal of staked ETH (EIP 4895). (EIP 3651, 3855, and 3860).

Ethereum EIP-3651 Will Reduce Prices

Further code reviews of EIP 4844 and Ethereum Virtual Machine Object Format (EOF) improvements were also agreed upon by the core team for potential inclusion in the Shanghai upgrade.

Another hotly debated upgrade that some developers hope to implement in Shanghai is proto-danksharding, or EIP 4844. An experimental form of sharding that gives Ethereum a new transaction type is known as proto-danksharding. It can be used to efficiently settle groups of transactions from layer 2 rollups.

The complexity and extent of the code modification are not yet well specified, therefore members from Besu and Nethermind voiced worries regarding implementation preparedness. Given that there are presently 15.51 million ETH staked, or about 12.7% of the available quantity, the Shanghai upgrade might put a lot of pressure on prices to decline.

Investors may get their first chance to sell ETH in Shanghai, some of which were staked for more than two years. Even if half of all staked ETH maintained their status, there would still be tremendous selling demand from the other half.