What to Expect From Ethereum’s Next Big Upgrade

Ethereum’s highly publicized recent update, “the Merge,” radically changed how the second-biggest blockchain network works by eliminating its reliance on cryptocurrency miners and dramatically reducing its energy costs. The network’s next upgrade, “Shanghai,” will focus on tying up loose ends.

After a month-long break, Ethereum’s developers reconvened last week for the (typically bi-weekly) Ethereum All Core Developers Zoom call. The motley crew of companies and individuals that maintain Ethereum’s open-source codebase discussed the features they intend to include in the network’s next update.

This article originally appeared in Valid Points, CoinDesk’s weekly newsletter breaking down Ethereum’s evolution and its impact on crypto markets. Subscribe to get it in your inbox every Wednesday.

The developers did not align on a timeline or full feature set, but they did reaffirm that a core focus of Shanghai would be to enable Ethereum validators to withdraw the crypto they “staked” to help operate the network.

The Merge brought proof-of-stake to Ethereum, a system which pays validators interest if they stake – or lock up – ether ETH$2,901.68, Ethereum's native currency, with the network. Currently, staked ETH can’t be unstaked, or withdrawn. Shanghai will change that, and validators will also gain access to whatever rewards they’ve earned from staking.

Alongside withdrawals, Shanghai is poised to introduce a handful of minor, developer-oriented tweaks to the Ethereum protocol. The list of goals, which is still being finalized, is viewable on Ethereum’s official github.

A long-wished-for feature is, however, missing from the Shanghai spec sheet, at least for now: proto-Danksharding. Ethereum’s gas fees – what users pay to complete an Ethereum transaction – are famously high, making certain kinds of transactions unaffordable. That was especially true as the crypto bull market peaked late last year.

Proto-Danksharding, once it’s released, will mark the first phase of a long-planned transition to sharding – a method of splitting up network activity into “shards” as a way to increase its capacity and bring down fees.

It’s unclear when proto-Danksharding will make its way into Ethereum’s next update. On the last developer call, researchers signaled that plans for the feature may be finalized in the next month or so.

That said, Ethereum development goals often are overly optimistic. There was talk of the Merge happening years ago. It took place in September. And even if proto-Danksharding does make it into the Shanghai spec sheet, the full “Danksharding” vision – a fully realized version of sharding that could dramatically improve the network’s usability – remains several months (or years) away.