The Ethereum blockchain is about to experience a big Shanghai upgrade, enabling the first-ever withdrawals of staked ether (ETH). This upgrade, also known as Shapella, will take place around 6:30 p.m. ET (22:30 UTC).

To ensure that stakers can access withdrawals, the developers have encouraged node operators to make sure they are running the latest version of their software clients. The Ethereum Foundation has also doubled their “bug bounty” program, upping the rewards to $500,000 to ensure the upgrade goes smoothly.

There are some technical limitations that will affect the amount of ETH that can be unstaked at once. Firstly, only 44% of nodes have changed their withdrawal credentials to the 0x01 address. Secondly, only 16 partial withdrawal requests can be put into a single slot (which happens every 12 seconds). Thirdly, staking services, such as Lido, which holds about 23% of all staked ether, will only release withdrawals after a later protocol upgrade, which is scheduled to happen in May.

Because of these technicalities, selling pressure will be distributed over several days, which gives smaller investors time to respond, and so limits the immediate effect on the price of ether. According to a report from Coinbase, this also gives the market time to adjust to the risks associated with the upgrade in general.

Overall, the market opinion for Ethereum's upcoming upgrade seems to be mixed. While some analysts worry about the risk of selling off, others are more confident in the project's structure. Many argue that the successful implementation of the two-way staking system could attract institutional investors in the longer term, regardless of the fluctuating price of ether.



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