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Bankless: Ethereum Shanghai Shapella upgrade, these 7 points to watch

Bankless

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Shapella marks the completion of Ethereum's transition to PoS.

原文标题：《 Bankless：上海 Shapella 升级的的 7 个关注点》

Original source: MarsBit News

It's upper Pella season!

After years in the making, one of the most anticipated network upgrades in Ethereum's history has arrived. The update will go live tomorrow around 6 p.m. Et!

Shapella Represents the final milestone in Ethereum's multi-year transition from proof of work (PoW) to proof of Acquisition (PoS) consensus. It will enable Ethereum pledges/verifiers to withdraw their deposits from the beacon chain.

This upgrade has significant implications for ETH and the pledge situation. As a result, there has been a great deal of discussion, topic, opinion (and misinformation) surrounding the impact of this event.

It's easy to get lost in the noise all at once - but we're here to help you understand. You have questions, we have answers. Here's everything you need to know about Upper Pella.

1. Shapella Upgrade? Isn't it called Shanghai Upgrade?

Yes, the community initially rallied around the name "Shanghai" for withdrawals. But the more technically correct "Shapella Epithets have recently found a home in crypto-vernacular.

Shapella = Shanghai + Capella, this new term refers to the implementation of changes occurring at both the executive and consensus levels of the network. At the execution level, "Shanghai" will create a new transaction type that allows the pledgor to withdraw the verifier's balance, while at the consensus level, Capella will make the beacon link subject to the withdrawal request.

Combined, the two would give the pledge the ability to withdraw deposits for the first time in Ethereum's history.

2. Why is it around Shapella There's so much hype?

Upper Pella marks the completion of Ethereum's transition to PoS.

The first step is the "merge," which combines the beacon chain, which launched in December 2020, with the old PoW Ethereum chain. It was completed in September 2022. Until then, however, voting has been a one-way street. Holders can deposit their ETH into the beacon chain and receive a reward, but cannot withdraw any funds.

Liquid collateral derivatives (LSD), such as Lido Finance and Rocketpool, alleviate some of this illiquidity problem by issuing tradeable derivative tokens representing claims on their deposits, providing liquidity to the mortgagee.

However, ETH pledge rate is only 14.9%. This is much lower than the average of 60.1% for the top 20 PoS networks, which may be due in large part to the current technical and liquidity risks associated with ETH pledge prior to Haupella. This is why many believe that Upper Pella removes the ETH pledge and the withdrawal enables the pledge to withdraw.

This expected pledge boom is also helping to fuel the enthusiasm around LSD, which is expected to be one of the main beneficiaries of this growth (more on that later).

3. Do I have to change the way I use Ethereum because of this?

No need! Ethereum users will not be affected by the Upper Pella implementation and will be able to transact as before. A little bit different, of course, is if you are a lone pledgee and/or verifier. If you are a member of one of these groups, you will be able to start applying for awards and withdrawing your pledge, if you choose to do so (more on that below as well).

4. How is the withdrawal made? How many ETH can be withdrawn?

There are currently over 18.2 million ETH (about 576,000 verifiers) deposited on the beacon, and another 1 million ETH rewards have been accumulated since the pledge went live.

The two groups of ETH have different exit procedures. The verifier exits (i.e. 18.2 million) through a complete withdrawal process. On the other hand, cumulative rewards, known as partial exit, are eligible for accelerated liquidation.

A full withdrawal must pass through two queues, withdrawal and withdrawal, and as a delay it becomes fully liquid when the pledge signals that they intend to withdraw their deposit. There are some verifier calculations when calculating this number, but after Upper Pella goes live, about 57,000 ETH will be eligible for withdrawal by full withdrawal each day. Up to 330,000 ETH can be moved to the exit beacon chain in the first 54 days after the upgrade.

Partial withdrawals (i.e., pledged incentives) can bypass these queues and can become liquidity almost instantaneously. According to our analysis, it takes approximately 4.75 days for this ETH to be extracted and circulated after the pella.

5. Shapella Will ETH sell off after that?

That's the $230 billion problem!

As mentioned above, a cumulative pledge award of 1 million ETH (US $1.9 billion) will be eligible to be drawn within 5 days of the upper Pella. This represents the first significant pledged ETH supply to enter the open market, and it is likely that some of it will be sold. If all are sold, it will account for about 12% of ETH's daily trading volume. However, the probability of this happening is very low because many verifiers choose to repledge in different scenarios.

After that, consider queuing and Shapella With a 27-hour delay after implementation, an estimated 33 million ETH (worth $6.3 billion at current prices) will be eligible to be drawn within the first 54 days after the upgrade. We don't know how much of that will be withdrawn and sold, although we are able to monitor these pledge flows in real time. But in the end, the author believes that the Shanghai upgrade has little impact on ETH price in the short term. I expect that most of the pledged ETH will not be extracted. A large portion of the ETH extracted will be repledged rather than sold.

In addition, the Shanghai upgrade is a "bullish unlock" in the medium to long term as it should lead to more ETH being bought and pledged. So far, so good for the bulls - as ETH had rallied 6.1% in the week leading up to the news. We'll see if it holds up.

6. What will happen to liquid pledged derivatives?

Like traders, LSD holders are not largely affected by Upper Pera.

While there is speculation that its liquidity may change and its price may fluctuate relative to ETH (i.e. trading volume above or below 1:1), LSD remains free to trade other ERC-20s and can continue to be deployed in supported DeFi protocols.

LSDS like stETH, rETH, frxETH and sETH2 will still represent 1:1 ETH deposits into their respective agreements for claims. However, not all LSD issuers will initially support withdrawals. For example, Lido, the largest pledged entity on the beacon chain, with 31.3 percent of the market, will not support stETH withdrawals until "around mid-May" due to pending audits.

7. How will the LSD governance token behave?

LSD governance tokens are among the best performing assets in 2023, along with Lido (LDO), Rocket Pool (RPL) and Frax (FXS), surging 103-135% year-to-date against the dollar and 17-37% against ETH.

Most of this overperformance was for Shapela Traders expect the upgrade to catalyze a flood of deposits into liquidity collateral agreements.