Ethereum Shanghai Upgrade & Instant 1:1 Unstaking Exclusive

Apr 03, 2023•6 min read

Things to Know:

  • Ethereum's most important upgrade since The Merge, Shapella (most commonly referred to as Shanghai) is set to take place on April 12, 2023.
  • The upgrade will allow validators to withdraw their staked ETH.
  • Nexo will start processing instant 1:1 unstaking 24 hours after the upgrade. (jump to Nexo's "Smart Staking")
  • As a Proof-of-Stake blockchain, Ethereum needs validators that verify transactions.
  • Staking is the act of depositing at least 32 ETH to activate validator software. The 32 ETH needed to activate a new validator node, however, might be too high for many.
  • For Nexo users, Smart Staking on Ethereum offers the ability to easily stake and unstake as little as $10 worth of ETH.
  • We will briefly pause ETH and ERC-20 token top-ups and withdrawals via the Ethereum network during the upgrade. Sending ETH & ERC-20 tokens over non-Ethereum networks will remain available 24/7. (jump to Nexo service update)

The Merge, a successful software upgrade that took place in September of last year, brought significant alterations to the Ethereum protocol, shifting it from a proof-of-work blockchain to a proof-of-stake protocol. This upgrade was the initial phase of the five stages of Ethereum’s development, as outlined by Vitalik Buterin, the founder of Ethereum, including “The Merge,” “The Surge,” “The Verge,” “The Purge,” and “The Splurge.”

What Is The Shanghai Upgrade?

TL;DR The Shanghai upgrade is the next phase in Ethereum's development. One of its most anticipated proposals will enable validators to withdraw their staked ETH, providing greater liquidity to the market. Another notable feature of this upgrade is that it will lead to an increase in the gas limit, allowing for more transactions to be processed on the Ethereum network. The Shanghai upgrade will also include two other improvement proposals that tackle high gas fees and the overall performance of the network.

🗓️The software upgrade will activate on the Ethereum network at epoch 194048, which is set to take place at 22:27:35 UTC on April 12, 2023. Here is the countdown.

Shanghai + Capella = Shapella

Shanghai actually refers to changes to Ethereum’s execution layer, most notably, enabling staked ETH to be deposited to execution layer wallets. The Shanghai upgrade requires a simultaneous change to the Beacon Chain, which has been dubbed Capella.

Shanghai + Capella = Shapella, so this is another name you may hear a lot in the coming weeks. It is set to include several improvements that will enhance the blockchain's functionality:

EIP-4895:

  • Staked ETH can be withdrawn by validators.
  • Increases liquidity for long-term Ethereum holders and validators.
  • Allows them to withdraw their ETH after more than two years of staking with negligible gas fees.

EIP-3860:

  • Limits the maximum size of initcode to 49152.
  • Applies an extra 2 gas for every 32-byte chunk of initcode.
  • Solves out-of-gas exceptions on Ethereum.
  • Improves the overall efficiency and reliability of the Ethereum network.

EIP-3855:

  • Introduces a new instruction for the EVM.
  • Helps shrink the size of smart contracts.
  • Optimizes the contract code.
  • Improves the Ethereum network’s performance and usability.

EIP-3651:

  • Makes block building cheaper.
  • Allows for builder-proposer separation.
  • Cuts gas fees for network participants.
  • Eliminates the need for traders using builders to pay for failed transactions.

Smart Staking on Nexo

Before the implementation of EIP-4895, participating in the staking of ETH was a one-way street. You could secure an APY but without the ability to withdraw your ETH rewards.

To overcome this limitation, we introduced Nexo Smart Staking, so that Ethereum users can earn rewards for holding their ETH on the platform.

At the time, months before the upcoming upgrade, we were among the first to offer ETH unstaking without any lock-up period. In keeping with our pioneering spirit once again, we are happy to announce that Nexo users will continue to have a competitive advantage and extra flexibility after the upgrade. 👇

Nexo will be able to provide instant 1:1 unstaking to its clients 24 hours after the Shanghai upgrade without any cooldown period*. With most other staking solutions, the unstaking period is expected to take several days.

Please note that contrary to popular belief, there is no need to unstake as a result of the upgrade. You can continue staking your ETH and earning 4-12% APY on Nexo. No action is required and your assets will be safe and secure during the upgrade.

Nexo's smart staking also takes care of all of the technical details of staking, so our clients don’t have to set up a node or maintain the necessary hardware and software.

As with everything else on Nexo, Ethereum staking feels familiar. All you need to do is make an Exchange transaction. Simply swap your ETH for NETH (Nexo Staked Ethereum) at a 1:1 ratio, and you’re ready to earn staking rewards. By purchasing this asset, you are proving your validation of the Ethereum network via Nexo's validator node. Benefits include:

  1. 4-12% APY, paid out daily in NETH
  2. Same APY for every Loyalty tier
  3. No balance limits
  4. Borrow against NETH and keep earning
  5. No gas fees
  6. Start with as little as $10 worth of ETH

Not a validator? Just swap your ETH for NETH tokens (1:1) on Nexo's easy-to-use platform. Swap back to unstake.

What Does the Shanghai Upgrade Mean for Nexo Users?

As Ethereum edges towards its big Shanghai upgrade, here is what you need to know about your ETH and ERC-20 token holdings on Nexo and what we are doing to prepare you for the change.

  • As a precaution and to ensure funds’ safety, Nexo will briefly pause ETH and ERC-20** token top-ups and withdrawals via the Ethereum network during the upgrade. You will be unable to see incoming transactions for these assets in your Nexo account during the pause but all such transactions will be processed once the services have resumed.
  • Sending ETH & ERC-20 tokens over non-Ethereum networks as well as swapping, trading, and borrowing against them will be possible at all times.
  • No action is required to upgrade on your part and your assets will be secure, as always.

At all times, you can still:

  • Receive and send ETH and ERC-20 tokens through all Layer 2 (L2) networks supported by Nexo and available for top-ups and withdrawals;
  • Swap ETH and ERC-20 tokens on the Nexo Exchange;
  • Buy and sell crypto with existing funds;
  • Trade on Nexo Pro using all spot and margin tools; Transfer assets between the Nexo platform and Nexo Pro;
  • Borrow funds against, use the Nexo Booster, and the Nexo Card with ETH and all ERC-20 tokens.
  • Top-up and withdraw NEXO through BEP2.

The Shanghai upgrade should be seamless for our clients, but this downtime is necessary for us to verify that our systems have successfully transitioned. To ensure the security of your assets, we recommend that you deposit ETH to Nexo ahead of time. You will be informed via email and our social media channels (Twitter, Reddit, Telegram) when ETH and ERC-20 tokens are once again available for top-ups and withdrawals.

Further reading:

What Is Ethereum Staking?

Ethereum Smart Staking on Nexo

How to Stake ETH

The Ethereum Merge & ETH Fork

How to Buy Ethereum (ETH) with Credit or Debit Card

*Market conditions permitting, Nexo will be able to provide instant Ethereum unstaking to its clients as early as 24 hours after the completion of the Shanghai upgrade. As the importance of staking grows, a lot of demand is expected in the months after the fork and Nexo reserves the right to add cooldown periods to reflect the Ethereum mainnet unstaking mechanics over which Nexo has no control.

**The Ethereum Shanghai upgrade will affect Ethereum mainnet top-ups and withdrawals for the following assets on Nexo: ETH, NEXO, PAXG, USDP, TUSD, MKR, UNI, AXS, MANA, APE, SAND, GALA, CRV, 1INCH, MATIC, AAVE, USDC, USDT, DAI, SUSHI, LINK, HT, LDO, ENS, ENJ, KNC, BAT, YFI, CHZ, CVX, DYDX, SNX, GMT, COMP, GRT, and SWEAT.