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Ethereum’s Next Network Upgrade Slated For March 2023

The Shanghai hard fork of Ethereum is scheduled to be released in March 2023 and will allow Beacon Chain staked ether (ETH) withdrawals. Following a second hard fork known as Ethereum Improvement Proposal (EIP) 4844.

At the 151st Ethereum Core Developers Meeting on December 8, core developers tentatively set a March 2023 deadline for Ethereum’s Shanghai hard fork, also known as EIP 4895. The Shanghai hard fork will increase the scalability of the ETH network and address three critical issues for Ethereum: changes to the Ethereum Virtual Machine (EVM) object format, withdrawals from the Beacon Chain, and a reduction in L2 fees.

The Beacon Chain is currently locked with Staked Ether (stETH). Following the completion of the upgrade, users who had staked Ethereum prior to the Merge will be able to withdraw their funds as well as any other rewards that may be available. The stETH token was created by Lido, a decentralized finance protocol, and there are approximately 3.5 million in circulation, worth approximately $4.48 billion.

Ethereum recently completed an upgrade known as the Merge, which transitioned from proof-of-work (PoW) to proof-of-stake (PoS) (PoS). The Ethereum Foundation has structured the upgrades in this manner to simplify and maximize the focus on the successful transition to proof-of-stake.

Following on from the Shanghai hard fork, developers are considering a second hard fork in the third quarter of 2023 to implement “proto-danksharding,” or EIP 4844. EIP 4844 is a critical step toward making the network more scalable by dividing it into “shards,” which increases capacity and lowers transaction fees.

EIP 4844 will introduce a new transaction format known as “shard blob transactions,” which will allow Ethereum nodes to store and access off-chain data. Currently, layer-2 technologies such as Optimistic Rollups can increase Ethereum’s scalability by 10x to 100x. Developers anticipate that incorporating large portable bundles that can contain cheaper data in Ethereum transactions will increase roll-up capacity by up to 100x.

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