Ethereum is preparing to launch a user-facing dress rehearsal of its much-anticipated Shanghai upgrade, with a public testnet of the software set to go live Wednesday morning.
The public testnet, dubbed Zhejiang, will allow any Ethereum user to simulate the process of withdrawing staked ETH. That full capability will be rolled out when the Shanghai upgrade goes live—sometime in March or April, Ethereum core developer Terence Tsao told Decrypt. Previously, estimates for the upgrade were firmly committed to a release by March.
Shanghai’s release timeline has been scrupulously monitored and haggled over, largely due to pressure created by the massive amount of capital that will remain in limbo until the upgrade’s successful implementation.
In December 2020, Ethereum first rolled out ETH staking: a process by which users can deposit ETH with the network to become validators and help authenticate on-chain transactions. In return, these validators earn rewards in the form of newly generated ETH. Since then, validators have staked almost $26 billion worth of ETH with the blockchain. Those funds won’t be made accessible, though, until Shanghai implements ETH withdrawals.
The Zhejiang public testnet, which launches Wednesday at 10 a.m. EST, will give validators the opportunity to play around with withdrawal features on a simulated version of Ethereum meant to mimic a post-Shanghai chain. The testnet will also give Ethereum’s core developers the opportunity to monitor mass use of such features and tweak them to resolve any potential issues.
While Ethereum routinely rolls out public testnets in anticipation of software upgrades, developers expect Zheijiang will receive more public attention than usual. That’s because ETH withdrawal capability is of particular interest to intermediary firms, like Lido, Coinbase, Kraken, and Binance, which stake ETH for their users in massive pools (a minimum amount of 32 ETH, or just over $50,000, is required to stake with the network).
Analysts at JP Morgan recently remarked that ETH staking withdrawals could net Coinbase alone over $500 million in revenue annually, potentially ushering in “a new era” for the struggling crypto exchange.
Naturally, with billions of dollars worth of passive income ripe for the picking, exchanges and staking services will want to make sure their ETH withdrawal features are functioning as intended as soon as Shanghai launches. That added interest will likely make the Zheijiang testnet particularly useful to intermediary firms, Ethereum core developer Marius Van Der Wijden told Decrypt.
This is also a great opportunity for all tools to test out how they want to collect, display and use the withdrawal information. Making the experience smooth for users is one of our highest priority now!
— parithosh | 🐼👉👈🐼 (@parithosh_j) January 31, 2023
Multiple core developers told Decrypt that Shanghai’s rollout is going well and on track for an early spring release.
