Ethereum’s Shanghai hard fork will have a target release time frame of March 2023 and will allow Beacon Chain staked ether (ETH) withdrawals. Subsequently, following a second hard fork called Ethereum Improvement Proposal (EIP) 4844.
Ethereum’s Shanghai Hard Fork Upgrade
On December 8 discussion at the 151st Ethereum Core Developers Meeting, core developers tentatively set a deadline of March 2023 for Ethereum’s Shanghai hard fork also called EIP 4895. The Shanghai hard fork will make the ETH network more scalable and address Ethereum’s three critical issues: changes to the Ethereum Virtual Machine (EVM) object format, withdrawals from the Beacon Chain, and reduction of L2 fees.
Staked Ether (stETH) is currently locked on the Beacon Chain. Going forward, when the upgrade is complete, users who had staked Ethereum prior to the Merge will be able to withdraw their funds plus any other rewards that may be available. Lido, a decentralized finance protocol, has created the stETH token and there are close to 3.5 million in circulation, worth roughly $4.48 billion.
Ethereum has recently completed an upgrade called the Merge shifting from proof-of-work (PoW) to proof-of-stake (PoS). To simplify and maximize the focus on the successful transition to proof-of-stake, Ethereum Foundation has structured the upgrades in this manner.
EIP 4844: Proto-Danksharding
To follow up on the Shanghai hard fork, developers are considering a second hard fork in the third quarter of 2023 that will introduce “proto-danksharding” or EIP 4844. EIP 4844 is an essential step toward making the network more scalable by dividing it into “shards”, a method that increases capacity and reduces transaction fees.
EIP 4844 will launch a new transaction format called “shard blob transactions” that will allow for off-chain data to be stored and accessed by Ethereum nodes. Currently, layer-2 technologies such as Optimistic Rollups can improve the scalability of Ethereum by 10x to 100x. Developers expect that implementing large portable bundles that can contain cheaper data in Ethereum transactions will enhance the capacity of rollups by up to 100x.