TronWeekly

Crypto World News

You are here: Home / Archives for Shanghai Upgrade

Shanghai Upgrade

Ethereum’s Alarming Centralization Surge After Merge: JPMorgan Report

by

Ethereum (ETH) has experienced a surge in staking activity following the implementation of the Merge and Shanghai upgrades, but this growth comes at a price. A recent research report by JPMorgan (JPM) highlights the trade-offs that Ethereum faces as it seeks to balance staking adoption with concerns over centralization and yield.

The report underscores how Ethereum’s journey towards staking has led to increased centralization. The network’s shift towards staking has inadvertently concentrated control over staked ether in the hands of a few major operators. This centralization has raised concerns within the crypto community, as it contradicts the ethos of decentralization that underpins blockchain technology.

In response to these centralization concerns, decentralized liquid staking platforms like Lido have gained prominence. Lido has actively worked to mitigate centralization risks by adding more node operators. This strategy aims to prevent any single entity from wielding excessive influence over the network.

However, even with efforts to decentralize, the report cautions that any degree of centralization poses inherent risks. A concentrated number of liquidity providers or node operators could potentially act as single points of failure, become vulnerable to attacks, or collude to create an oligopoly, which could undermine the interests of the broader Ethereum community.

Ethereum’s Rehypothecation Risk

Another risk highlighted by JPMorgan is the phenomenon of rehypothecation. This occurs when liquidity tokens from staking are reused as collateral across multiple decentralized finance (DeFi) protocols. If a staked asset experiences a significant drop in value or is compromised due to malicious attacks or protocol errors, it could trigger a cascade of liquidations across DeFi platforms.

Moreover, the report points out that the appeal of Ethereum from a yield perspective has diminished as staking has gained popularity. The total staking yield has decreased from 7.3% before the Shanghai upgrade to approximately 5.5%. This reduction in yield has occurred at a time when traditional financial assets are offering increasingly attractive yields, making Ethereum’s value proposition less compelling for some investors.

In conclusion, Ethereum’s foray into staking has ushered in a new era for the network, but it has also raised critical concerns. The delicate balance between decentralization and centralization risks, along with the challenges posed by rehypothecation and reduced yield, presents a complex landscape for Ethereum to navigate as it continues to evolve. The crypto community and Ethereum’s development teams must work collaboratively to address these issues and ensure the long-term sustainability and resilience of the network.

Ethereum Faces Challenges as Network Fees Drop, Activity Declines

by

In recent developments, Ethereum network fees have hit their lowest point in 2023, standing at just $1.15 per transaction. While this decline in transaction costs may seem like a positive sign, a closer look reveals some concerning trends in Ethereum’s ecosystem.

Historically, Ethereum has thrived when its native cryptocurrency, Ether (ETH), becomes more affordable to circulate. Lower fees make it easier for users to engage with the network, leading to increased utility. This surge in utility often results in a recovery in Ethereum’s market capitalization, as more users and developers flock to the platform.

However, the situation appears more complex when considering recent data presented in a research report by JPMorgan. The report highlights a significant drop in ETH network activity following the Shanghai upgrade in April. Daily transactions have fallen by 12%, daily active addresses have dropped nearly 20%, and the total value locked in decentralized finance (DeFi) protocols on the network has slumped almost 8%.

Ethereum’s Decline: Factors at Play

JPMorgan’s analysts, led by Nikolaos Panigirtzoglou, point to several factors contributing to this decline in Ethereum activity. Regulatory uncertainties and enforcement actions in the U.S., declining institutional interest, reduced venture capital investment, and incidents involving FTX and Terra have all created a bearish environment for ETH. Despite the positive energy-saving shift from proof-of-work (PoW) to proof-of-stake (PoS) following the Merge upgrade, the increase in network activity has been disappointing.

The analysts also express concerns about centralization, citing the dominance of liquid staking protocols like Lido and a high concentration of validators on the network.

While challenges loom large, there is hope on the horizon with the upcoming EIP-4844 upgrade, also known as Protodanksharding, planned for Q4 2023. This upgrade introduces data-containing blobs capable of accommodating more data than the blocks themselves, potentially boosting network activity.

However, the analysts caution that “persistent negative crypto factors continue to pose challenges,” indicating that ETH may need more than just technological upgrades to regain its former vitality.

In response to JPMorgan’s report, Ethereum enthusiasts have pointed out the progress made in Layer-2 solutions, suggesting that these off-chain scaling solutions could reinvigorate the network.

As Ethereum grapples with these challenges, its price remains under $1,600, highlighting the need for the Ethereum community, developers, and stakeholders to address these issues collectively. The future of Ethereum’s utility and market cap recovery will depend on how effectively these challenges are navigated and the network’s adaptability to evolving dynamics in the crypto space.

Ethereum’s Merge & Shanghai Upgrade: A Mixed Bag in JP Morgan’s Lens

by

Ethereum’s ambitious endeavors, the Merge and the Shanghai upgrade, designed to revolutionize ETH Tokenomics, have fallen short of their lofty expectations. In September 2022, Ethereum, the world’s second-largest blockchain, underwent a momentous transformation, transitioning from proof-of-work [PoW] to proof-of-stake [PoS]. This epoch-making move significantly slashed the network’s energy consumption by an astonishing 99%.

The subsequent Shanghai upgrade, introduced on April 12, 2023, facilitated the withdrawal of staked ether [stETH]. Shortly after its release, the blockchain experienced a surge, with 80% of inflows attributed to various institutional-grade ether staking service providers, marking a threefold increase. However, despite the commendable strides in energy efficiency, the overall activity on the network has left much to be desired, as observed by JPMorgan analysts under the leadership of Nikolaos Panigirtzoglou.

Ethereum

Drawing attention to Ethereum’s daily transaction count, JPMorgan’s report reveals a 12% decline since the implementation of the upgrade. Furthermore, daily active addresses have dwindled by nearly 20%, and the total value locked [TVL] in decentralized finance [DeFi] on the Ethereum blockchain has suffered a nearly 8% slump.

While the report attributes ETH’s performance to last year’s “bearish forces,” including notable setbacks like Terra and FTX, regulatory actions within the United States, and a contraction within the stablecoin ecosystem, it appears that these challenges have overshadowed the positive impact of the Shanghai upgrade.

Despite the 50% increase in staking following the hard fork, contributing to bolstered network security, concerns linger regarding the continued dominance of liquid staking protocols such as Lido, which raises doubts about centralization.

Ethereum Dencun Upgrade, The Road Forward

The report holds out hope for a potential uptick in Ethereum network activity with the impending EIP-4844 upgrade, colloquially known as “proto-danksharding.” This groundbreaking feature aims to scale the blockchain by creating additional space for “blobs.” However, it cautiously acknowledges that the persisting bearish trends in the cryptocurrency market could continue to pose challenges.

In a noteworthy development for the Ethereum network, developers have recently reached a consensus regarding the comprehensive scope of an upcoming upgrade dubbed “Dencun.” Expected to be introduced later this year, this hard fork will integrate five Ethereum Improvement Proposals [EIPs] designed to enhance data storage capabilities and reduce transaction fees, potentially ushering in a new era for Ethereum’s functionality and performance.

Ethereum CEX Deposits Hit Two-Month High Amid Price Slump

by

Ethereum (ETH), the­ second-largest cryptocurrency by market capitalization, has experie­nced a significant increase in de­posits on centralized exchange­s (CEX) over the past two months, with $383 million of Ethe­reum (ETH) deposited into the­se cryptocurrency exchange­s, according to data from IntoTheBlock.

One of the­ largest deposits came from a single­ address, about 61,216 ETH since­ the Ethereum Initial Coin Offe­ring (ICO) in 2015. Interestingly, this address re­mained inactive for eight ye­ars until it recently transferre­d its entire balance to anothe­r address connected with the­ Kraken exchange on July 19th.

Whale Ale­rt, a service that monitors and records significant crypto transactions, has re­cently identified multiple­ transfers of ETH to Coinbase. Over the­ past week, more than 200,000 ETH has be­en sent to the e­xchange via various transactions.

These­ significant movements of ETH to centralize­d exchanges may imply that certain inve­stors are preparing to sell the­ir holdings, potentially exerting downward pre­ssure on the price. However, it is also possible that some transfers are not intended for immediate or complete liquidation but for diversification or security purposes.

Ethereum Staking Hits Record High After Shapella Upgrade

Despite­ the increase in de­posits made by CEX, Ethereum experience­d a remarkable surge in the­ total amount of ETH staked on its network. According to data from IntoTheBlock, this figure­ reached $52.3 billion, the highest ever.

The succe­ssful launch of the Shapella upgrade on July 14 is attribute­d to the increase in staking activity. This upgrade­ introduced a new feature­ that offers stakers the ability to withdraw the­ir ETH at any time without having to wait for months or years.

The proce­ss of staking enhances the se­curity and decentralization of the Ethereum network. It effe­ctively minimizes the risk of a single­ entity gaining control over 51% of the ne­twork’s power, ensuring a more distribute­d system. 

Additionally, staking reduces e­nergy consumption and mitigates environme­ntal impact compared to traditional Proof-of-Work (PoW) systems, as it operate­s on a more efficient mode­l called Proof-of-Stake (PoS). 

According to Coinmarketcap, ETH is trading at $1,890 with a slight -0.19% decrease over the past 24 hours. Howe­ver, the value­ of ETH experience­d some decline in the­ previous week,  as it was trading above $2,000 on July 16.

ETHUSD trading at $1,890 | Source: ETHUSD

Related Reading | Surprising Impact: $2.5M Shiba Inu Sale and Price Anomaly

Security Concerns Raised For Ethereum Staking Nodes Ahead Of Shanghai Upgrade

by

In a recent Twitter thread, Shenyu, the founder of Cobo, raised concerns about the security of private keys for Ethereum staking nodes. With an upcoming upgrade in Shanghai, more than two years of ETH staking can withdraw cash. However, Shenyu warns that the private keys of some staking nodes may have already been leaked.

This news comes after thousands of addresses eligible for arbitrum airdrops had their private keys leaked. Shenyu recommends that institutions that provide centralized staking should review their private key storage methods, check the status of authorized personnel, monitor server logs, and formulate emergency plans.

Institutions offering centralized staking services should heed this warning and implement necessary measures to safeguard their users’ funds. As staking gains more traction, the associated security risks also escalate, making it imperative to establish robust security protocols to protect users’ assets.

As the upgrade in Shanghai approaches, users and institutions should be vigilant and take all necessary precautions to prevent potential security breaches. Shenyu’s warning serves as a timely reminder of the importance of robust security measures for staking services.

Sharp Drop in Ethereum Options Implied Volatility (IV)

In another related update, the Ethereum market has experienced a sharp drop in options implied volatility (IV), despite the upcoming Shanghai upgrade. IV has fallen by as much as 8% in the past two days, which is a significant drop. This decline in IV is mainly attributed to the drop in market liquidity due to the Easter holidays.

While it is not unusual for market liquidity to drop during holidays, it is unexpected for the monthly IV to fall to the same level as Bitcoin. This drop in IV is an indication that traders are not as concerned about Ethereum price movements as they have been in recent weeks.

According to the analytics platform, GreeksLive, the fall in IV is primarily driven by the reduced demand for options rather than an increase in supply. The reduced demand for options can be attributed to the lower trading volume in the Ethereum market, as investors take a break during the holiday period.

The decline in IV indicates that traders are less concerned about potential price movements in the Ethereum market in the short term. However, this could change after the Shanghai upgrade, which is expected to significantly change the Ethereum network.

Ethereum traders and investors should monitor the market closely ahead of the upgrade. Although the drop in IV is not alarming at the moment, market sentiment can change rapidly, emphasizing the need to be updated on any potential market-moving events.

Related Reading | Weekly Market Watch: Ethereum Bullish Surge Boosts Altcoins’ Performance

Unveiling Ethereum’s Potential Catalysts For A Price Surge beyond $2,000

by

Over the past few days, Ethereum, the second-largest cryptocurrency, has been experiencing a tug-of-war between its bulls and bears. However, the bulls seem determined to make significant gains and surpass the major resistance level of $2000, while the bears are putting up a tough fight and driving down the price.

Nevertheless, there has been a notable price rally in the past month, as the ETH price surged from a low of $1,423.26 to a daily high of $1,853.89. According to the data from CoinGecko, the price has seen an 8.5% increase in value over the past 30 days.

Source: CoinMarketcap

As per the CoinMarketcap’s data, ETH is currently trading at $1,771.96, but both the daily and weekly charts are indicating a downward trend. Interestingly, a renowned crypto analyst, ALI, has recently made a prediction that Ethereum is on the verge of a breakout.

In a tweet, he mentioned that ETH had regained a crucial support level between $1,700 and $1,780, where 1.41 million addresses have bought 6.48 million $ETH. He further added that if this level remains unbroken, there is a high possibility of further upside momentum, considering the lack of resistance ahead.

Shanghai Upgrade: Anticipated Boost To Ethereum Price

The Ethereum network is preparing to launch its next upgrade, the Shanghai upgrade, on April 12, 2023. The upgrade is expected to significantly impact the price of Ethereum, potentially driving it up to over $2000. 

One of the key benefits of the upgrade is that it will unlock the ether that has been staked since the Merge, which occurred in September 2022. It will create new liquidity options for ETH holders, allowing them to withdraw their staked ETH and potentially increase demand for staking ETH.

However, some investors are concerned that the new liquidity options will increase selling pressure, which could drive down the ETH price. Currently, there are 16 million ETH staked, which will be available for withdrawal once the Shanghai upgrade is live. 

The cryptocurrency’s holders have two options for withdrawal. First, they can withdraw only the rewards they’ve earned from their validator nodes. Second, they can exit their validator nodes entirely, withdrawing the 32 ETH required to run a validator.

As per the report, analysts have attempted to predict the demand for ETH withdrawal, but it’s difficult to predict accurately as human emotion and market sentiment will come into play. The success of the Shanghai upgrade and its impact on the price of Ethereum remains to be seen.

Related Reading | Bitcoin Sees Massive Volume Of Liquidation: Details

Ethereum’s Shanghai Upgrade Has Now A Target Date Of April 12

by

The long-awaited Ethereum’s Shanghai hard fork now has a target date of April 12, thanks to its core developers.

The deadline- 10:27:35 UTC on April 12, epoch 620,9536 will be formally announced by developers on GitHub.

The Shanghai upgrade will ultimately allow validators to withdraw their staked ether as well as any incentives received from adding or approving blocks to the blockchain, transforming Ethereum’s entire shift to a proof-of-stake [PoS] network.

Not long ago, ETH’s last test run for the Shanghai upgrade- the Shapella hard fork was executed on the Goerli testnet, paving the way for staked ETH withdrawals.

For Shapella to be forked onto the Goerli testnet , it required 15 epochs, “terence.eth” stated since network participation was below the two-thirds threshold then:

Moreover, the final dress rehearsal encountered some issues. As reported by TronWeekly, there was a delay in the deposit process as several testnet validators did not update their client software prior to the Goerli fork.

Another developer of the Ethereum foundation Parithosh Jayanthi noted that once the issues with the validators running older versions of clients were fixed, the attestation rate increased and is at the moment finalizing.

Five Ethereum Improvement Proposals are included in the Shanghai mainnet upgrade, including EIP-4985, which would allow staked Ether withdrawals on the Beacon Chain and complete Ethereum’s switch from a proof-of-work [PoW] consensus to a proof-of-stake (PoS) consensus.

Due to its resemblance to bond interest payments, ETH’s switch to a PoS consensus where investors can “stake” their tokens in exchange for incentives has caught the attention of regulators.

Staking Ethereum Has Placed It Under Regulators Scanner

A new accusation from a New York state regulator has revived the legal discussion after SEC head Gensler proposed ETH be securities.

KuCoin, a cryptocurrency exchange based in Seychelles, is being sued by New York Attorney General Letitia James on March 9 for allegedly breaking the law by selling unregistered securities. Ether was named in the lawsuit as one of the unregistered securities.

State and federal agencies, like as the Commodities Futures Trading Commission, have long regarded Ethereum as a commodity.

The crypto market would be greatly affected by its designation as a security, which would fundamentally alter how [and whether] the asset and others like it are traded in the United States.

Ethereum: Yet Another Delay In The Shanghai Upgrade

by

The Ethereum Shanghai upgrade will now probably be implemented somewhere in the first two weeks of April, as opposed to the original estimate of late March. On March 2, the delay was disclosed at a gathering of ETH developers.

Core developers agreed during the conference that the hard fork would take place roughly a week after the Goerli testnet launch, which was scheduled for March 14. The Shanghai hard fork will have its last run-through on the Goerli testnet before being implemented on the mainnet.

Tim Beiko, an Ethereum core developer and project manager, stated that “for mainnet we usually want to give people at least two weeks after the announcement,” before going on to say that “if Goerli happens on the 14th, everything goes well, and on the 16th we agree to move forward with mainnet, I think the earliest that puts us is like the first week of April.”

They did not expressly agree on a mainnet date, but Beiko stated in a Twitter post on March 2 that they “probably” will set one during the following devs meeting on March 16, “provided things go well on Goerli.”

The Shanghai hard fork’s final opportunity for Ethereum users and staking services to guarantee a smooth transition when it launches on the mainnet is the Shanghai Capella (also known as Shapella) upgrade to Goerli.

Advantages Of Ethereum Shanghai Upgrade

Ethereum placed in the Beacon Chain will be able to be gradually withdrawn thanks to the eagerly anticipated Shanghai mainnet update.

Withdrawals of ETH will be dynamic and based on the number of validators that are currently leaving the network in order to preserve network stability and security. Validators must go through a two-stage procedure that entails a withdrawal period and an exit queue, so it will happen gradually over time.

17.1 million ETH, or little over 14% of the supply, are now staked on the Beacon Chain. It is valued at about $28 billion based on current asset prices.

Shanghai has additionally been seen as positive for companies that offer liquid staking. Since the debut of the Ethereum consensus layer in December 2020, staked ETH has been locked on the Beacon Chain.

In the months following Shanghai, there may be an increase in collateral due to the flexibility and greater yield chances that liquid staking platforms like Lido give on staked ETH.

Ethereum Reaches New High With 3040 ETH Burn, Led by Uniswap & OpenSea

by

Ethereum is blazing a new trail in the world of cryptocurrencies, reaching a high of 3040 on February 2nd. It marks the highest point since November 10th, 2022, and solidifies its place as one of the top players in the game.

The primary sources fueling this fiery surge are two popular decentralized exchanges, Uniswap and OpenSea. Both platforms have seen a significant increase in usage and transactions, leading to a corresponding rise in the value of Ethereum.

Additionally, as the demand for Ethereum continues to grow, so too does the cryptocurrency greed index, which has hovered around 60 for several days. It indicates a high level of excitement and anticipation in the market as investors scramble to get a piece of the action.

However, the burning of ETH is a key metric in the world of cryptocurrency and is being closely watched by those in the know. This latest record high burn is just another example of how Ethereum is making waves in the market and solidifying its place as a leading cryptocurrency.

Ethereum Developers Set Sights On Upgraded Mainnet Launch In Mid-March

The Ethereum community was excited as developers gathered for a conference call on February 2nd to discuss the latest developments in the Ethereum network. 

According to Christine Kim’s blog, the conference call pointed out that assuming all public testnets of the Shanghai upgrade go smoothly, developers are expected to activate the upgraded mainnet in mid-March.

The Shanghai upgrade is a highly anticipated event in the Ethereum community. It will bring several important changes to the network, including increased efficiency, reduced gas fees, and a new consensus algorithm. 

The upgrade is expected to make Ethereum more secure, scalable, and user-friendly, which will be a big boost for developers and users alike.

The conference call also discussed the progress of the Shanghai upgrade on various testnets. The Zhejiang testnet will activate the Shanghai upgrade on February 7th, followed by releases on the Sepolia testnet (mid-February) and Goerli testnet (late February and early March). 

However, the smooth activation of the upgrade on these testnets will be crucial to ensuring a successful mainnet launch.

Related Reading | India’s Retail Behemoth Set To Add CBDC Support

Ethereum Launches Its First Mainnet Shadow Fork: Details

by

Core developers of Ethereum have launched the first mainnet shadow fork to determine the preparedness of the ETH staking withdrawal feature.

This marks a step forward in enabling users to access more than $26 billion worth of staked ETH in March as planned.

Announcing the same, Marius Van Der Wijden, an Ethereum Foundation software developer, claimed that despite a few issues, the deployment of the shadow fork was overall successful.

A shadow fork is designed to test network upgrades with existing state data from the original chain and also check for any bugs.

These “rehearsals” act as an important tool for web3 developers because it allows them to test their assumptions about the network’s upcoming upgrades against the most current conditions of the mainnet’s production environment.

With these, core Ethereum developers, node providers, and independent stakers can be ready for upcoming network-wide changes so the Ethereum application ecosystem is not interrupted.

The Shanghai will be the first significant update since the historic Ethereum merge in September, which transformed the network’s operating system to a proof-of-stake one.

Users would deposit ETH with the network after the merge to become validators and aid in on-chain transaction authentication. In exchange, these users have been allowed to earn prizes in the form of freshly created ETH.

Upgrade to Ethereum Shanghai involved this

The amount of Ethereum invested into the staking contract has steadily increased since the Beacon Chain started live in November 2020. As of Jan. 7, deposits totaling 15.9 million ETH, worth $20 billion, or 13% of the total supply, TronWeekly reported.

Shanghai’s main highlights include:

Bringing down the gas charge for layers 2 solutions could make using Eth after Shanghai faster and more affordable.

Efficiency improvements in data access and storage, like the elimination of past block hash information from contracts. Removal of the contract lock on staked tokens will enable unstaking and the withdrawal of staked ETH.

On Dec. 8. the 151st Ethereum Core Developers Meeting was conducted and discussions were held on setting the timeframe of March 2023 for the Shanghai hard fork.

Additionally, the core programmers planned to roll out the Ethereum Improvement Protocol [EIP] 4844 updates, which would bring proto-danksharding to the network, in May or June 2023.