Ethereum Shanghai Upgrade Now Live: Here’s What to Look Out For

Introduction

With the successful implementations of the Ethereum Merge back in September 2022 and the Ethereum Shanghai Upgrade a few hours ago on April 12, 10:27 pm UTC – the Ethereum of today is vastly different than the Ethereum we knew exactly a year ago. In the past seven months, Ethereum has managed to take major steps to completely overhaul its consensus mechanism, moving from a proof-of-work (PoW) consensus mechanism to now a fully functioning proof-of-stake (PoS) consensus mechanism.

Additional read: Ethereum Shanghai Upgrade Goes Live

This effort was taken up in order to improve the second-largest crypto by market cap and the largest smart contract-capable network on a number of fronts. One of the first things that the developers wanted to solve was the environmental issues that were characteristic of the PoW method of securing the network. A PoS alternative offered drastically higher energy efficiency in the overall blockchain. Along with that, other reasons included improving the throughput of the Ethereum blockchain, increasing transaction speeds, and lowering transaction costs on the chain.

This is because apart from Ethereum, a number of other blockchains had entered the market in the last couple of years which were built using technologies that were far ahead of Ethereum. Thus to catch up and maintain its competitive edge in the market, Ethereum had to undertake. To achieve all these things, the first step was to convert the PoW blockchain to a fully functioning PoS chain.

Now, let’s discuss what lies ahead.

Read on: Ethereum Price Prediction 2023

Ethereum Shanghai Upgrade is Complete. What’s next?

Ethereum Merge and subsequently the Shanghai Upgrade were nothing but the first few in a series of steps that are going to happen to make Ethereum a more efficient, scalable, and secure network going forward. In going with the tradition of being poetic, the steps ahead have been named with the rhyme in mind – the Surge, Scourge, Verge, Purge, and finally the Splurge.

via GIPHY

Here’s the full breakdown:

Updated roadmap diagram! pic.twitter.com/MT9BKgYcJH

— vitalik.eth (@VitalikButerin) November 4, 2022

The Surge, the Scourge, the Verge, the Purge, and the Splurge!

Very briefly, the ‘Surge’ is the next step in the Ethereum masterplan which intends to make Ethereum far more scalable than it was before. Placed under the EIP-4844, it involved the process of ‘sharding‘ – where Ethereum’s entire network would be split up into 64 smaller individual fragments, also known as ‘shards’, where transactions would be processed in parallel and thus dramatically increase the network’s scalability.

This is a newly added step – known as the ‘Scourge’ – which is aimed to make the blockchain a credible and neutral place for transaction inclusion and also avoid centralization around MEV, or maximum extractible value. Simply put, this is an effort to weed out the use of bots to extract value on the chain from unsuspecting regular users by front-running trades or carrying out attacks.

Next up is the ‘Verge’ where the concept of ‘Verkle trees’ are expected to be introduced. It is yet another idea for improving the scalability factor of the network. According to Ethereum’s co-founder, Vitalik Buterin, Verkle trees are a ‘powerful upgrade to the Merkle proofs that allow smaller proof sizes’. In this phase, we will see an effort in the direction to optimize storage and reduce node sizes and thus aid in the objective of improving the scalability of the network.

Up next we have the ‘Purge’. Akin to its name, this step of the Ethereum masterplan has the objective of reducing, or in other words ‘purging’ spare historical data on the network. This step will help to reduce the amount of historical data on the network and will make the process of validating the blockchain even more efficient. It is aimed to cut down on network congestion issues and allow the processing of transactions at greater speeds. Ethereum co-founder Buterin has even said that after this phase, the network should be able to process around 100,000 transactions per second (TPS), up from about 29 TPS.

Last but not least, is ‘Splurge’. This is the final step in the Ethereum masterplan, which Buterin has described to be the ‘fun stuff’. This phase would be dedicated to ensuring that the earlier steps are functioning properly.

Additional Read: Ethereum Merge Misconceptions

Ethereum Upgrades: A Recap

Before we get into Ethereum’s Shanghai Upgrade, let’s recap all that has happened that has led us up to this moment, when we finally have a fully functioning proof-of-stake (PoS) Ethereum network!