Ethereum Shanghai Upgrade: Why Is This Event a Turning Point for the Entire Network?

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Let's start with the main point: what actually happened?

The Shanghai upgrade is a major upgrade to Ethereum 2.0, and the name has nothing to do with the city. The essence is simple: it's a version of the protocol upgrade that radically changed the network's economics.

For a long time after the transition to Proof-of-Stake in 2022, users could participate in ETH staking, but it was impossible to withdraw their coins and earnings—they were frozen. Imagine investing in a project’s shares for two years, but you can't cash them out. That's roughly what it was like.

What changed in practice?

Technical level

Three key improvements were made:

  • EIP-4895 — a flexible mechanism for unlocking staked ETH
  • EIP-3855 — faster transaction processing
  • EIP-3860 — lower gas fees

Result: the network became faster, fees dropped, and DeFi and NFT got a better UX.

Economic level

After the upgrade, stakers gained the ability to withdraw ETH and accrued earnings. This triggered an endogenous demand effect—people began to believe in ETH more as an income-generating asset.

Net result: the price of ETH increased by about 50% since the beginning of the year (from ~$1,200 to ~$1,800).

Who benefits the most?

The NFT community could see a revival. With lower fees and higher speed, the NFT ecosystem becomes much more attractive to new users. This is a real earning opportunity for those who believe in Web3.

Stakers now have another strong argument. The current minimum staking APY for ETH is around 4.8%, and there is room for growth. Many users are likely to move into staking right now.

About withdrawal restrictions

Ethereum has implemented a panic protection: only 6 validators can withdraw funds at a time (every 6.4 minutes), with a maximum of 1,350 exiting staking per day. In total, no more than 43,200 ETH per day can be withdrawn. This prevents mass dumping and stabilizes the network.

What's next?

The Shanghai upgrade was a turning point for the entire economic layer of Ethereum. The network became faster, cheaper, and more attractive. And this is just the beginning—expectations for ETH growth amid these improvements remain high.

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