Ethereum Shapella upgrade took place on April 12th and is arguably one of the most significant upgrades on the Ethereum network in recent times. The name Shapella comes from combining two upgrades that were deployed simultaneously, Shanghai and Capella, and therefore the name Shapella was created.

Since Ethereum’s transition to Proof-of-Stake (PoS) on September 15th, 2022, the Ethereum Shapella upgrade is the most important addition to the network as it brings a major mechanic change, one that was highly anticipated by many, especially network validators that had to stake 32 ETH to be in the position to secure the Beacon Chain.

Prior to The Merge to PoS, Ethereum was running on the Proof-of-Work (PoW) consensus algorithm. Since the plans to transition were in the works for many years, the developers created the so-called Beacon Chain in the meantime.

The Beacon Chain was from the start (and still is) validated by PoS. To keep its integrity, beating able to operate as planned, and carry out smart contracts and transactions it needed validators since miners do not exist on PoS-based blockchains.

The Beacon chain was developed as a PoS, and as such it required validators to stake 32 ETH to secure the network. These validators were able to become part of ETH 2.0 from the beginning. To learn more about ETH 2.0 read this post I wrote some time back What is Ethereum 2.0 And How It Can Change The Industry?

The 32 ETH validators staked were locked in the Beacon Depositor contract, during the developmental stage, and were locked for an undetermined time, allowing validators to earn rewards in ETH and be able to unlock it sometime in the future when The Merge and Shangai update get finalized and integrated into the Ethereum network.

The Shapella Upgrade Improvement Proposals

The Shapella upgrade delivered five Ethereum Improvement Proposals (EIPs):

• EIP-3651: Warm COINBASE
•  EIP-3855: PUSH0 instruction
•  EIP-3860: Limit and meter initcode
•  EIP-4895: Beacon chain push withdrawals as operations
•  EIP-6049: Deprecate SELFDESTRUCT

EIP-3651 is in place to lower the gas costs that are associated with the maximum Extractable Value payments when accessing the COINBASE address. This will allow other coins to be used for gas payments if there is an insufficient balance of ETH in the wallet. It is important to note that ETH will always be the preferred gas payment method. Coinbase in this context refers to other currencies that can be used to pay for gas fees, it is not referring to the popular exchange.

EIP-3855’s main upgrades include: reducing contract code size, reducing the risk of contracts (mis)using various instructions as an optimization measure, and reducing the need to use DUP instructions for duplicating zeroes. This in nutshell means reduced gas cost, mainly for developers.

 EIP-3860 essentially puts a limit on the size of the “INITICODE”, intending to lower the gas fees. This upgrade is created to ensure that “INITICODE” is fairly charged (most importantly cost is proportional to initcode’s length) to minimize the risks for the future and to have a cost system that is extendable in the future.

 EIP-6049 focuses on “SELFDESTRUCT” code depreciation and misuse, with an emphasis on growing costs as time goes by and breaking change due to any possible change in the code.

EIP-4895, many would agree, is the most relevant update deployed to the network. These updates allow validators to partially or fully withdraw their ETH stake and rewards accumulated. Partial withdrawals allow 16 validators per ETH block to take out their rewards, and users can do so every week. These refer to any balance above 32 staked ETH. The more significant are full withdrawals, which allow 1800 validators to fully unstack their ETH each day, which comes to 57,600 ETH per day, on top of the partial withdrawals.

What Is Next For The Price Of ETH?

Given the above information, we can see that some significant changes happened in the Ethereum network, that will, no doubt, have a major impact on the price of ETH. It is important to know that the average price of ETH when stalked was $3,149, which can be a good indicator of what comes next.

In my opinion, these changes will have a positive impact on the ETH price, especially in the long run, because it allows more asset allocation. Given the ETH stalked price of $3,149, it is realistic to expect that validators will not sell at a loss, and will at least wait for the price of ETH to reach $.3,200. I think that validators will not sell at that time either since it is evident that the ETH price will keep growing in the next bull run, and reach an all-time high when the market turns bullish. I predicted in my post What Project Will I Invest In Before Bull Market Starts, that ETH price will get to and possibly surpass $10,000 by the end of 2025. I am confident that the majority of validators share this view as well and will wait for the market top to sell their holdings and get the most out of it.