The highly anticipated Ethereum hard fork, known as the Shanghai mainnet upgrade, has been officially set for April 12.
The upgrade, approved by Ethereum core developers during the All Core Developers Execution Layer #157 call on March 16, will introduce five Ethereum Improvement Proposals, with the most notable being EIP-4985.
This proposal will enable staked Ether withdrawals on the Beacon Chain, which completes Ethereum’s transition from proof-of-work to a proof-of-stake (PoS) consensus. Validators will receive rewards payments automatically at periodic intervals in withdrawal addresses, and stakers can exit positions entirely, reclaiming their full balance.
The Ethereum PoS smart contract has attracted over 17.6 million ETH, worth nearly USD 29.4 billion at publication time. Analysts predict that the upgrade could trigger a sell-off in the short term, as the transition to PoS officially started on September 15, 2022, with the Merge, which replaced miners with validators and introduced ETH staking as a key component of the network. Ethereum’s roadmap has several updates coming after Shanghai, including the “Surge,” “Verge,” “Purge” and “Splurge.”
However, the switch to a PoS consensus could have regulatory implications for ETH and the crypto space. The United States Securities and Exchange Commission Chair Gary Gensler suggested in September 2022 that the blockchain’s transition might bring ETH under regulators’ radar. After a recent crackdown on crypto firms providing staking services in the US, Gensler again suggested on March 15 that proof-of-stake coins might be securities. With Ethereum’s hard fork set for April 12, the crypto community will be closely watching for regulatory developments and the impact on the market.