Following the successful execution of Ethereum’s latest upgrade, the network’s native asset ETH has soared overnight.
The successful implementation of the Shanghai upgrade has opened up the possibility for Ethereum stakers to finally withdraw their holdings, which have been locked up since the staking process began in December 2020. This upgrade was the largest one since last September’s merge event, which saw Ethereum transition from a proof-of-work consensus algorithm to a proof-of-stake one.
As a proof-of-stake network, Ethereum uses validators instead of miners to secure the network. Validators must first deposit or stake 32 Ethereum, which is equivalent to around $63,000 at the current market price, and maintain a node continuously to earn rewards. This model is different from the proof-of-work consensus algorithm used by Bitcoin and other cryptocurrencies, which requires miners to solve complex mathematical problems to add transactions to the blockchain and earn rewards.
The shift to proof-of-stake is an essential step toward Ethereum’s transition to Ethereum 2.0, which aims to improve the network’s scalability, security, and sustainability. The new protocol will introduce features such as sharding, which will allow Ethereum to process more transactions while reducing network congestion and increasing transaction speeds. Ethereum 2.0 also aims to address the high gas fees that have plagued the network in recent times, making it more accessible to users and developers.