Expectations on the next major Ethereum upgrade

Key points: 

• "Shanghai" will allow ETH withdrawals
• Proto-Danksharding is missing in this update, which means fees stay the same
• Shanghai is also preparing to roll out some smaller, developer-focused changes to the Ethereum protocol.

"Shanghai" will allow ETH withdrawals, but a long-awaited way to lower gas fees may be missing from the update.

Ethereum's most recently well-known update, "The Merge," has fundamentally changed the way the second-largest blockchain network works, eliminating its reliance on cryptocurrency miners and drastically reducing energy costs. The network's next upgrade, "Shanghai," will focus on tackling loose ends.

After a month-long hiatus, Ethereum developers reunited last week for a (usually bi-weekly) Zoom Call with all Ethereum core developers. The disjointed staff of companies and individuals that maintain Ethereum's open-source codebase discussed features they plan to include in the network's next update.

The developers have yet to align themselves with a timeline or full feature set, but they did reiterate that Shanghai's core focus is to allow Ethereum validators to withdraw their "stakes" of cryptocurrency to keep the network running to support.

The merger brought the Ethereum Proof-of-Stake, a system that pays interest if validators stake or lock Ethereum. Currently, staked ETH cannot be unstaked or withdrawn. Shanghai is about to change that, and validators will also get all the rewards they get from staking.

In addition to withdrawals, Shanghai is also preparing to roll out some smaller, developer-focused changes to the Ethereum protocol. The target list is still being finalized and can be viewed on the official Ethereum Github.

However, one long-awaited feature is missing from the Shanghai datasheet, at least for now:  proto-Danksharding. Ethereum gas fees — the fees users pay to complete Ethereum transactions — are notoriously high, making certain types of transactions unaffordable. This was especially true when the cryptocurrency bull market peaked late last year.

The release of Proto-Danksharding will mark the first phase of a long-planned transition to sharding — a way to divide network activity into "shards" to increase capacity and reduce fees.

It's unclear when the proto-Danksharding will make its way to Ethereum's next update. During the last developer call, the researchers said plans for the feature could be finalized in the next month or so.

However, Ethereum’s development goals are often too optimistic. The merger was discussed a few years ago. It happened in September. Even if the original Thanksgiving shards make it into the Shanghai datasheet, the full "Danksharding" vision — a fully realized version of sharding that can significantly improve the availability of the network — is still months (or years) away.