Ethereum has reached a new milestone in adoption and security, with the number of validators on its network now exceeding 500,000, according to data from TagScan. As to whether this step or the next Shanghai upgrade will have an impact The price of Ethereumit depends on a number of factors which we will explore below.
Regardless, this is a significant achievement for the Ethereum ecosystem and highlights the growing hype and trust in the network as it prepares for the Shanghai upgrade, which will will enable staked ether withdrawals for the first time.
Significance of the 500,000 validators milestone
The growing number of validators indicates that more individuals and entities are willing to invest in the network and play a role in maintaining its integrity and security, which is potentially a bullish sign for the network. Ethereum price following Shanghai upgrade.
“We can consider the security of the Ethereum network on two axes. One is the total value at stake. The other is the degree of decentralization,” Ben Edgington, Ethereum developer and primary product owner of Ethereum told ConsenSysa company that works on Ethereum and Quorum blockchains.
Although the decentralization of validators can be difficult to analyze, reports indicate that there are approximately 11,400 physical nodes out of 80 countries.
“[This] is a considerable degree of decentralization, and much more distributed than what we had under proof of work (pre-merger),” Edgington said. “Many of these nodes are run by home actors like me, which underpins the protocol with a huge degree of resilience and diversity.”
With the total value staked on the Ethereum network reaching 16 million ETH (over $22 billion), it is becoming increasingly difficult and expensive to attack the network, including withdrawing 51% attack.
What are validators and how do they work?
Validators are essential for maintaining the integrity and security of the Ethereum network. They are responsible for verifying and processing transactions on the blockchain by validating the digital signatures that accompany each transaction.
This ensures that the conditions specified in the smart contract code of each transaction have been met before they are added to the blockchain.
To become a validator, a person or entity must deposit 32 ETH, which is currently worth around $45,000. This deposit is used to run a dedicated staking node on the proof-of-stake blockchain.
Once the deposit is made, the validator earns network staking rewards in exchange for their services. However, staked funds are locked in the network and cannot be accessed until the Shanghai upgrade, which is expected to take place in March. This upgrade will enable staked ether withdrawals for the first time.
Validators play a vital role in the Ethereum ecosystem, as they are responsible for maintaining the integrity and security of the network. They act as gatekeepers, ensuring that only valid transactions are added to the blockchain and that the network remains decentralized and secure. The high deposit requirement to become a validator also ensures that only those who are committed to the network and have a significant financial stake in its success become validators.
Shanghai Upgrade Progress and Details
Ethereum developers say they are making steady progress towards their goal of launching the Shanghai upgrade and enabling ETH staked network withdrawals by March. This week, the group launched “devnet 2,” a developer network specifically designed to allow client teams to fine-tune the ETH withdrawal process and ensure everything is running smoothly.
According to a call to developers earlier in the month, the network’s launch was generally smooth, with minor but expected hiccups.
“Things are looking good. I’m not aware of any issues that could delay Shanghai at this time,” said Ethereum lead developer Marius Van Der Wijden.
The Shanghai upgrade is a highly anticipated event for the Ethereum community, as introducing the ability to withdraw funds is naturally a priority for the Ethereum community and its developers. Ethereum’s price is expected to be impacted by the Shanghai upgrade as investors and stakeholders gain confidence in the platform.
The Shanghai upgrade was originally expected to include a number of other highly anticipated updates, including proto-danksharding, a streamlined data sampling process that would make Layer 2 transactions on Ethereum much cheaper and faster. .
However, proto-danksharding was eventually removed from Shanghai to ensure ETH withdrawal capability was rolled out as soon as possible.
The developers also made the difficult decision to further delay updates to the Ethereum Virtual Machine (EVM), the underlying mechanism in Ethereum that deploys smart contracts. There has been no EVM update for over two years, as this maintenance was delayed in the Fusion Age to avoid further complicating an already complex procedure.
Fortunately, these delays may make a March delivery date for Shanghai more likely.
“We want to make sure everything is working as it should before we release the Shanghai upgrade, and these delays will help us do that,” Van Der Wijden explained.
Shanghai upgrade is bullish for Ethereum price?
Whether or not the Shanghai upgrade is bullish for ethereum price largely depends on macroeconomic factors and the broader market cycle at this stage. And of course, if the upgrade goes well.
Preparing for the upgrade could see an increase in the price of Ethereum, while the aftermath could see traders taking profits and temporarily driving the price down.
However, if all goes according to plan and the Ethereum ecosystem continues to progress and hit the major milestone, the long-term outlook for the major crypto, including its price action, should be positive.