What has Shanghai upgraded? Why are traders all paying attention to it?

In March, Ethereum is planning a major move - the Shanghai Hard Fork. This is the most important upgrade since its shift to PoS last September.

Core Changes: 16 million locked ETH can finally be withdrawn.

The main focus of this upgrade is EIP-4895, which serves a very straightforward purpose - unlocking the staked ETH of validators.

Since last December, Ethereum validators have been locking up ETH to help operate the network. Each validator must stake 32 ETH to participate in block validation and earn rewards. But there’s a condition: before the Shanghai upgrade, this money had to be locked up, and not a penny could be withdrawn. Now it’s finally possible.

Calculate the Accounts: The accumulated validation rewards are approximately 1 million Ether, which can be directly withdrawn at the moment of the Shanghai launch. This is significant for stakers and is also a focal point of market attention.

How to operate extraction?

Validators have two options:

Partial Withdrawal: Set the “withdrawal credential”, and the system will automatically withdraw the earned rewards, while continuing to stake 32 base Ether to help the network operate.

Full Withdrawal: Completely exit, withdraw all 32 ETH, and also cease validation work.

But it is important to note that there is a queuing mechanism for withdrawals—only 16 withdrawal requests (including partial and full withdrawals) can be processed per block every 12 seconds. So if everyone tries to run away at the same time, you might have to wait in line.

How will the market react? What are traders betting on?

This is a critical issue. There are two opposing viewpoints:

Bears: Stakers can finally cash out, which may cause selling pressure and put pressure on ETH prices.

Bullish faction: Shanghai will only attract more people to participate in staking, as they now truly have control over their funds.

At present, the likelihood of all large validators running away is low—after all, staking has become the new norm in the Ethereum ecosystem, and continuing to earn rewards is still attractive to many.

Besides unlocking Ether, what other changes are there?

The four small EIP proposals mainly focus on gas fees optimization:

EIP-3651: Reduces the cost for validators to access specific addresses, helping to improve the MEV issue and user experience.

EIP-3855: A new code tool called “Push0” has been introduced, which can help developers reduce gas costs.

EIP-3860: Sets a gas fee cap for developers calling smart contract code to avoid unexpected high costs.

EIP-6049: Notifies developers that the old code “SELFDESTRUCT” is being deprecated, which is also a move towards reducing costs.

In simple terms, these are small optimizations aimed at reducing usage costs, which are beneficial for both ecosystem developers and users.

What happens after the upgrade?

The Ethereum team has maintained a “low profile” for Shanghai — the core focus is to release the locked ETH, while other major changes are postponed.

The next highlight is proto-danksharding (sharding technology), expected to launch in Q3 2023. This is a significant move that can greatly enhance Ethereum's scalability by doubling the network capacity through sharding.

There is also an upgrade of the EVM Object Format planned, continuously optimizing the performance of the Ethereum Virtual Machine.

Summary: Shanghai appears to be an upgrade that “releases capabilities” — allowing Ethereum's PoS mechanism to operate fully and giving stakers complete control over their funds. The market will closely observe the real behavior of stakers — whether they continue to earn rewards or collectively cash out, which will determine the short-term trend of ETH.