Ethereum developers are set to test the chain to assess if staking platforms and crypto exchanges can withdraw their ETH deposits without any security related vulnerabilities. The public testnet version of it is set to go live today.
The testnet version of Shanghai upgrade named ‘Zhejiang’ will allow users to test the stimulation of staked ETH withdrawals. According to Ethereum core developer, Terence Tsao the mainnet Shanghai upgrade is slated to take place between March – April, 2023.
The Shanghai upgrade’s progress is monitored under a constant microscopic view since a colossal amount of money is locked in the Beacon chain smart contract.
Additional Read: Ethereum Shanghai Upgrade scheduled for 2023
Ethereum was originally launched as a ‘Proof of Work’ (PoW) blockchain on July 15, 2015. In 2016, the co-founder of Ethereum, Vitalik Buterin – a Russian Canadian programmer wrote the Mauve paper which outlined the blockchain’s transition to Proof of Stake from Proof of Work.
In December 2020, the Beacon chain – the Proof of Stake chain was launched. Soon after its launch, ETH staking was introduced on the chain. Through staking, users could become validators on the chain to earn an incentive for validating transactions and locking up their ETH funds. To become a sole validator on the chain a user needs to lock 32 ETH for security purposes. Any misconduct by the validator can result in a penalty (called slashing). Since its inception, validators have staked $26 billion in ETH staking. These funds can be withdrawn only after the Shanghai upgrade goes live on mainnet.
In September 2022, Ethereum merged with the Beacon chain after a line of upgrades and tests. It is the first blockchain to transition from a Proof of Work consensus model to a Proof of Stake consensus model.
The developers at Ethereum recently conducted the Shadow Mainnet Fork to test the capabilities of the chain. Ethereum developer Marius Van Der Wijden announced the successful launch of the ‘Withdrawal-Mainnet-Shadow-Fork-1 on January 23, 2023.
The Zhejiang public testnet is set to go live today at 10 a.m. EST and will give validators the opportunity to test out withdrawal features that will prove to be essential before the Shanghai upgrade goes live. The testing environment with participants volunteering to check the functionalities of the chain will give a lot of insight to the developers and make amends in case of any malfunctioning or code vulnerabilities.
Additional Read: Ethereum Developers Team Launching a ‘Shadow Fork’
While Ethereum developers testing the chain and sending routinely updates on the progress, the public testnet news will garner more attention as this could be the final lap before the Shanghai upgrade goes live. The testnet launch is crucial for platforms like Lido, Coinbase, Kraken, and Binance as they have staked funds in massive pools (a minimum amount of 32 ETH, or just over $50,000, is required to stake with the network).
According to Defilama, Lido DAO (LDO) has staked the highest amount of ETH, followed by MakerDAO, Curve and Convex Finance.
Analysts at JP Morgan recently commented that ETH staking withdrawals could alone get Coinbase over $500 million in revenue marking a new beginning for the exchange as it has been struggling to keep up with flat or falling crypto market.
The anticipation of staking platforms and institutional investors is natural as billions of dollars of passive income is right there ready to be withdrawn by people. Both exchanges and staking platforms will want to ensure that their ETH withdrawal features are operational as soon as the Shanghai upgrade opens doors for stakers to withdraw their principal amount along with the interests earned.
This is also a great opportunity for all tools to test out how they want to collect, display and use the withdrawal information. Making the experience smooth for users is one of our highest priority now!
— parithosh | 🐼👉👈🐼 (@parithosh_j) January 31, 2023