Close Menu
TechCentralTechCentral

    Subscribe to the newsletter

    Get the best South African technology news and analysis delivered to your e-mail inbox every morning.

    Facebook X (Twitter) YouTube LinkedIn
    WhatsApp Facebook X (Twitter) LinkedIn YouTube
    TechCentralTechCentral
    • News

      Tech sector feeling impact of Transnet ports chaos

      28 November 2023

      Black Friday damp squib in South Africa

      28 November 2023

      Chabeli faces uphill battle as new SABC CEO

      28 November 2023

      Jobs bloodbath looming at the Post Office

      28 November 2023

      304-page document sets out SA’s energy transition plan

      28 November 2023
    • World

      Orange withdraws from process to buy into Ethio Telecom

      28 November 2023

      Musk’s X hit by advertiser exodus

      27 November 2023

      Battery prices are tumbling as input costs fall

      27 November 2023

      Paris mayor quits X, calling Musk platform a ‘gigantic global sewer’

      27 November 2023

      Huawei to move smart car operations to new JV

      27 November 2023
    • In-depth

      Africa has a feature phone problem

      23 November 2023

      Is your ISP monitoring your online activity?

      10 November 2023

      The real Big Brother Africa

      2 November 2023

      Compared: Starlink prices around the world – including Africa

      30 October 2023

      Africa is booming

      30 October 2023
    • TCS

      TCS+ | Ricoh – safe and secure role in today’s digital ecosystems

      27 November 2023

      TCS+ | NEC XON on going toe to toe with cybercriminals

      22 November 2023

      TCS | How ShotSpotter is fighting gun crime in Cape Town

      13 November 2023

      TCS+ | SOC-as-a-service: CYBER1 SOC and the future of cybersecurity

      13 November 2023

      TCS+ | Why your company needs Arctic Wolf to stay secure

      9 November 2023
    • Opinion

      Could Cape Town become Africa’s Silicon Valley?

      14 November 2023

      Chris Kruger: What I learnt in my decades in IT leadership

      6 November 2023

      Ransomware attacks: how South African companies should respond

      6 November 2023

      Fibre providers urged to go ‘nano’ to cut costs

      31 October 2023

      Big banks, take note: PayShap should be free

      20 October 2023
    • Company Hubs
      • 4IRI
      • Africa Data Centres
      • Altron Document Solutions
      • Altron Systems Integration
      • Arctic Wolf
      • AvertITD
      • CallMiner
      • CoCre8
      • CYBER1 Solutions
      • Digicloud Africa
      • Digimune
      • E4
      • Entelect
      • ESET
      • Euphoria Telecom
      • iKhokha
      • Incredible Business
      • iONLINE
      • LSD Open
      • Maxtec
      • MiRO
      • NEC XON
      • Next DLP
      • Paratus
      • Ricoh
      • Skybox Security
      • SkyWire
      • Velocity Group
      • Videri Digital
    • Sections
      • AI and machine learning
      • Banking
      • Broadcasting and Media
      • Cloud computing
      • Consumer electronics
      • Cryptocurrencies
      • E-commerce
      • Education and skills
      • Energy
      • Fintech
      • Information security
      • Internet and connectivity
      • Internet of Things
      • Investment
      • IT services
      • Metaverse and gaming
      • Motoring and transport
      • Open-source software
      • Public sector
      • Science
      • Social media
      • Talent and leadership
      • Telecoms
    • Events
    • Advertise
    TechCentralTechCentral
    Home » Sections » Cryptocurrencies » Ethereum’s next big upgrade is here

    Ethereum’s next big upgrade is here

    The ethereum blockchain’s next big software upgrade is poised to happen on Wednesday.
    By Olga Kharif11 April 2023
    Facebook Twitter LinkedIn WhatsApp Telegram Email

    Crypto enthusiasts are about to get some good news: the ethereum blockchain’s next big software upgrade is poised to happen on Wednesday. But like almost everything else in the digital-asset world these days, the long-anticipated tweaks won’t come without complications.

    The overhaul, dubbed Shanghai, follows last year’s game-changing Merge, which replaced power-hungry computers with a process involving staked, or pledged, ether tokens and so-called validators to order transactions on the most commercially successful crypto network. Now, Shanghai will allow withdrawals for the first time by owners of ether who have staked their coins since December 2020. Owners of the cryptocurrency who stake earn a yield that is paid out in additional ether tokens.

    Currently, about 18 million ether is being staked, worth about US$36-billion, according to Etherscan. Of this amount, it’s estimated that 1.2 million ether — worth $2.2-billion at current prices — will be withdrawn in the five days after Shanghai, according to researcher Coin Metrics.

    The big question is whether the update will spur a broader exodus by holders over time

    The big question is whether the update will spur a broader exodus by holders over time or prompt an influx of fresh demand when the tokens are unlocked. A cloudy regulatory outlook adds further uncertainty to the mix — the US Securities and Exchange Commission has warned in recent months that staking services offered by some trading platforms essentially constitute the illegal sale of securities.

    “The market is going to whipsaw back and forth as they are trying to analyse what the increase in withdrawals is going to look like,” said Henry Elder, head of decentralised finance at Wave Digital Assets. “There’s no doubt in my mind we are going to see a lot of withdrawals.”

    Many ether holders may simply switch between different staking services, or move from operating their own staking equipment to outsourcing the work to a staking service that would operate the gear for them, Elder said.

    ‘Confident’

    It could take weeks or even months to take tokens out because withdrawals will be limited to maintain ethereum’s security. Tests leading up to the upgrade have gone relatively smoothly.

    “I am pretty confident in withdrawals,” Tim Beiko, who coordinates ethereum developers, said in an interview. “There’s not a single thing that keeps me up at night.”

    An added wrinkle: staking provider Lido — which accounts for about a third of all staked ether — is expected to only start enabling withdrawals in May. Another potential issue could involve some of the various computer nodes that support ether staking-wallet services. Once withdrawals are enabled, node operators will need to retrieve the keys needed to unlock users’ deposits. If they have misplaced them or are unable to locate them for some reason, staking services the nodes belong to could find themselves insolvent, and that could put pressure on tokens associated with these services, Elder said.

    “Nobody knows that the bank is insolvent until people start to pull their money out,” he said. “That’s a little bit of a black swan that’s on the horizon.”

    There’s also the risk of nodes getting hacked or going rogue, and trying to hold users’ funds up for ransom, said Mike Silagadze, CEO of Ether.fi, which lets stakers keep control of their keys.

    “Most people have this incorrect perception that when Shanghai goes through, that staking risk is reduced,” Silagadze said. “It’s actually the exact reverse, the risk exponentially grows at this point.”

    Ethereum developers point out that there has always been a chance that a service provider or a node would be hacked or lose keys, and Shanghai doesn’t increase that risk.

    “A possible threat exists if a third party were to gain an operator’s withdrawal keys,” said Ben Edgington, Teku product lead at ConsenSys, which works on ethereum infrastructure. “Any large operator should be taking the security of their keys very seriously, so I would be very surprised if there were any widespread leaks.”

    Once such issues have been resolved, the withdrawals feature may ultimately make ether a more attractive investment, beckoning retail investors and institutional investors looking for yield. But much will also depend on regulators’ views of the cryptocurrency and staking.

    “The risk element that gets de-risked is execution risk,” said Darren Langley, GM at staking service Rocket Pool. “There’s a lot of FUD [and claims that] ethereum will never ship withdrawals. That puts that to bed.”  — (c) 2023 Bloomberg LP

    Get TechCentral’s daily newsletter

    ether Ethereum
    Share. Facebook Twitter LinkedIn WhatsApp Telegram Email
    Previous ArticleTCS | Calvin Collett on the launch of Melon Mobile
    Next Article Emia Distribution and Mountain unveil DisplayPad, MacroPad keypads

    Related Posts

    Tech sector feeling impact of Transnet ports chaos

    28 November 2023

    Black Friday damp squib in South Africa

    28 November 2023

    Chabeli faces uphill battle as new SABC CEO

    28 November 2023
    Promoted

    IoT boom expected in South Africa

    28 November 2023

    Wellavi, Digimune redefine holistic wellbeing in Africa

    28 November 2023

    NEC XON, MTN launch Africa’s first 400G optical transponder

    27 November 2023
    Opinion

    Could Cape Town become Africa’s Silicon Valley?

    14 November 2023

    Chris Kruger: What I learnt in my decades in IT leadership

    6 November 2023

    Ransomware attacks: how South African companies should respond

    6 November 2023

    Subscribe to Updates

    Get the best South African technology news and analysis delivered to your e-mail inbox every morning.

    © 2009 - 2023 NewsCentral Media

    Type above and press Enter to search. Press Esc to cancel.