Breaking: Shanghai upgrade executed on testnet but not without issues

Ethereum validators are now one step away from being able to unstake their Ether from the Beacon Chain.

The Shapella hard fork has been executed on the Goerli testnet — the last test run before Ethereum validators will be able to withdraw their Ether (ETH) from the Beacon Chain.

There were, however, issues with the hard fork. Ethereum core developer Tim Beiko noted that while deposits were being processed, the process didn’t run as smoothly as it could have because several testnet validators didn’t upgrade their client software before the Goerli fork.

Deposits are being processed (https://t.co/CxYtPcGMCp), but it seems like several validators haven't upgraded. Looking into it

One challenge with testnet validators is that given the ETH is worthless, there's less incentive to run a validator/monitor it.

— timbeiko.eth (@TimBeiko) March 14, 2023

He blamed it on testnet validators having “less incentive” to make the upgrade given that the Goerli ETH "is worthless” but expects validators to make proper adjustments ahead of the fork on the Ethereum mainnet.

Ethereum researcher "terence.eth" explained that it took 15 epochs for Shapella to be forked onto the Goerli testnet because network participation was below the two-thirds threshold:

15 epochs later, Goerli has finalized.

There was nothing wrong with the Client software. We just had to get the offline operators to upgrade. It was a good stress test.

On to the next one. Mainnet! https://t.co/s573n5pC9f

— terence.eth (@terencechain) March 15, 2023

Through Ethereum Investment Proposal EIP-4895 staked ETH from the Beacon Chain will be “pushed” to the execution layer.

While the Shapella upgrade comprises five different EIPs, EIP-4895 has been by far the most anticipated as it moves Ethereum one step closer to a fully functional proof-of-stake system.

Shapella is expected to take effect on the Ethereum mainnet in early April following a few delays in preparing the Sepolia and Goerli testnets for the fork.

The hard fork will allow for partial and full withdrawals, and will theoretically unlock 17.6 million ETH when Shapella is forked, which equates to over $30 billion at current prices.

However several mechanisms are in place to prevent a flood of the ETH supply from hitting the market, according to the Ethereum Foundation.

The Shanghai upgrade will enable phased validator withdrawals, allowing users who have been staking to access their staked $ETH and staking rewards.

There are 522K active validators on Ethereum, and once the upgrade comes, only ~1.6k-1.8k validators would be able to exit per day pic.twitter.com/ewCvD7u1ER

— ParaSpace (@ParaSpace_NFT) March 8, 2023

The number of withdrawals allowed within a 24-hour period will only represent about 0.40% of the total staked ETH because only an approximate 2,200 withdrawals can be processed per day.

Related: Ethereum Shanghai upgrade could benefit liquid staking providers and cement ETH's layer 1 dominance.

This is because, in most cases, a maximum of 10 validators can be assigned to an epoch and it takes approximately five or six minutes for an epoch to be processed.

If each of the 2,200 validators withdraws the full 32 ETH staked per day it would only account for about 70,000 ETH — a fraction of the 17.6 million staked.

The execution on Goerli was shared in a March 15 live stream by EthStaker on YouTube.

We're going LIVE in ~10 minutes to discuss the Goerli Shapella Upgrade

Watch here https://t.co/PDFvmqyFGM

— r/EthStaker (@ethStaker) March 14, 2023