Overview
The Shanghai upgrade (also known as Shapella when combined with the Capella upgrade on the consensus layer) took place in April 2023. It was the first major upgrade following The Merge and completed the transition to Proof of Stake by allowing validators to finally withdraw their staked funds.
Key Features
- Staking Withdrawals: Enabled both 'partial withdrawals' (taking out earned rewards) and 'full withdrawals' (exiting the validator set entirely).
- Market Liquidity: Reduced the risk for stakers, as their capital was no longer 'locked' indefinitely.
- EIP-4895: The specific proposal that enabled the push of validator withdrawals from the Beacon Chain to the execution layer.
Impact
Shanghai proved that Ethereum's PoS system was fully functional and flexible, leading to a significant increase in the total amount of ETH staked in the following months.