Ethereum Network Launches New Testnet in Shanghai Upgrade

JAKARTA – The second largest cryptocurrency by market cap, Ethereum (ETH), has made the transition from Proof-of-Work (PoW) to Proof-of-Stake (PoS) in an upgrade called The Merge in mid-September. This time ETH is reportedly planning to launch a Shanghai upgrade.

This increase is planned to be implemented next year. Ethereum developers have launched a testnet to upgrade the Shanghai network. This upgrade will be the first upgrade after The Merge. Before implementing the upgrade, the developer plans to launch the Shandong testnet first.

The Shandong testnet allows developers to pilot the next phase of Ethereum development. This includes proper implementation of staked Ether (ETH) withdrawals. According to Ethereum Foundation DevOps engineer Parithosh Jayanthi, "the Shandong testnet is meant to allow developers to try out potential EIPs to find problems.”

Several Ethereum Upgrade Proposals (EIPs) are currently being considered for submission to Shanghai when the testnet goes live. This could potentially address some of the efficiency and scalability issues plaguing the network. The most anticipated proposal among many is EIP 4895.

The proposal allows for the withdrawal of the ETH staked in the Beacon Chain by users, in addition to any rewards earned over time. As is known, those who stake ETH as part of the transaction validation process on Beacon Chain have not been able to withdraw their ownership or rewards directly. Instead, anyone who intends to access these funds must use a liquidity token that represents their assets.

Another EIP under consideration is 4844, which sees the introduction of proto-danksharding. The proposal seeks to facilitate more data processing on the Ethereum network, thereby reducing transaction fees or gas fees. Proto-danksharding will also allow Layer-2 networks such as Optimism and Arbitrum to process a large number of ETH transactions.

According to the official Ethereum website, Proto-danksharding (aka EIP-4844) is a proposal to implement most of the logic and "scaffolding" (e.g. transaction formats, verification rules) that make up the full Danksharding specification but haven't actually implemented any sharding yet. In the proto-danksharding implementation, all validators and users still have to directly validate the full data availability.

While many Ethereum developers seem passionate about proto-danksharding, getting it into Shanghai will lengthen the time it takes to test and fix upgrades.

A third proposal worth mentioning under consideration is EIP 3540. About one of the EIPs included in the London Ethereum Upgrade (EIP 3541), this proposal relates to an Ethereum Virtual Machine (EVM). The EIP 3540 has the potential to facilitate the separation of code and data, making it easier to add future changes to the EVM.

Jayanthi explained that the final list of EIPs considered for inclusion in the Shanghai upgrade would not be finalized for the time being. Instead, it will be "one of the main talking points once the All Core Developer call starts again."