The deadline for the Shanghai hard fork in Ethereum is March 2023. In it, developers are working to introduce proto-danksharding via Ethereum Improvement Proposal (EIP) 4844.
Danksharding is the new sharding design proposed for Ethereum, which introduces some significant simplifications compared to previous designs.
According to Ekta Mourya – a crypto analyst at FXStreet – points out that the market is both anxious and fearful about the update. Therefore, while it is highly anticipated, it also generates fear in the community.
She points out that the Ethereum Core Developers Meeting on December 8 set a provisional deadline for the Shanghai hard fork. Thus, the Shanghai update will introduce a bunch of critical updates and incremental changes to the functionality of the Ethereum Virtual Machine (EVM)
So in preparation for the Shanghai update, the Ethereum Foundation launched a pre-Shanghai testnet on October 14. ‘Shandong’, the testnet was used to finalize the Ethereum Enhancement Proposals (EIPs) that are to be released in the actual update.
EIP 4844 will occur after the Shanghai hard fork and will introduce a new transaction type for the altcoin. Thus, the new transaction type is expected to free up space, increase transaction speed and reduce gas fees.
Massive ETH selling can occur
The upgrade involves a type of temporary fragmentation in which “blobs” of data persist on the Beacon node for a short period of time. The blobs are small enough to keep disk usage manageable.
The changes that EIP 4844 will introduce are compatible with Ethereum’s scaling roadmap.
However, the concern is that EIP 4845, which will also occur with the Shanghai hard fork, will free up ETH staking. Therefore, all users who are staking on ETH 2.0 will be able to withdraw their coins and sell.
So this is the main fear of the community. Because a release in staking can cause a massive sell-off of ETH and bring down the asset price.
“Therefore Shanghai, offers investors the first opportunity to unlock their ETH, some of which have been in staking since 2020. After two years, the blocked value is more than 15.5 million ETH, worth about $19 billion,” she notes.
