Who would have believed that the price of Ether would rally again above the $2,000 mark? But it seems like the long-awaited Shanghai upgrade led to a spike in Ethereum’s value, which advanced by over 10%. And if it were to analyse the charts, it looks like it’s on pace for a 13% weekly boost, so we expect to hear only good news related to the most popular altcoin.
Investors have been reticent to buy Ethereum in the weeks leading to the Shanghai upgrade because even if it’s excellent for Ethereum in the long run, as it allows more liquidity to stakers and investors, it also brings a certain level of uncertainty. Crypto investors have been worried that the market will face sell pressure after the upgrade, which enables investors to withdraw locked ETH. But the withdrawal process doesn’t happen so fast, and investors are patient because they don’t sit on significant profits considering the bear market. In addition, the amount of Ethereum released on the market after the upgrade is lower than expected.
Ethereum is outperforming Bitcoin after this big upgrade because it caused a positive reaction in the market, and investors feel confident that the most popular altcoin is coming back. 2023 could be an exciting year for 2023, and here’s what crypto specialists expect from the market.
The aftermath of the Shanghai upgrade
The Shanghai upgrade is the most important event in the Ethereum blockchain after the Merge, which marked a massive step towards sustainability by replacing the proof-of-work consensus mechanism with the proof-of-stake one. Ethereum replaced miners with validators to reduce the network’s energy consumption, and the community welcomed the change in a positive way.
However, the Merge had extensive implications besides reducing the network’s footprint. Users staked Ether to prepare for the upgrade and qualify as validators. Therefore, they had to stake at least 32 ETH or more to be eligible for the validation process. The staking process started around December 2020 when the Beacon Chain was launched to function in parallel with the Mainnet. Still, it came with a catch; the users couldn’t withdraw the staked funds until the network completed the next update (Shanghai).
The Shanghai upgrade brought withdrawal capabilities to the Beacon Chain, and validators can now use the staked coins. No one can tell for sure how the update will impact the supply and demand or the Ethereum price in the following months, but the fact that a high amount of Ether is released into circulation will definitely affect the ecosystem.
Now that the Shanghai upgrade is completed, Ethereum enthusiasts are turning their attention to other events that are about to happen in the network. The team behind the most popular altcoin offered glimpses of what they plan for the blockchain, and proto-danksharding is one of the changes it’ll experience in 2023. If you’re new in the crypto scene, you might think it’s a sci-fi term, but the process relates to something you might be familiar with – sharding.
Sharding is a pross that implies dividing a system into smaller and easier-to-manage entities, enabling scalability. Specialists compare it to a web of small roads and streets that lead to a highway. If the Ethereum network is split into multiple shards, it’ll make it easier for traders to benefit of its capabilities, faster transactions, and lower gas fees.
However, danksharding comes with a twist because it aims to create extra space for blob data instead of enabling faster transactions. Considering the complexity of the process, Ethereum developers decided to postpone the event until after the Shanghai upgrade.
Smart contract capability
Ethereum is named the most popular altcoin because it offers a series of characteristics Bitcoin lacks. One of the most important features it has is the innovative contract capability. Vitalik Buterin developed the blockchain to support the creation of programmatic smart contracts and apps using the Ether currency.
The last few years showed that Ethereum’s use cases in the real world are growing and sustain the ecosystem’s value because smart contracts power DApps, NFTs, and DeFi.
DApps are smart contracts created for specific or recurring use. There are over 3,000 DApps on the Ethereum network, and their number is continually growing. Ethereum hosts more DApps than any other platform, including the top ten DApps responsible for 90% of the overall blockchain transaction volumes.
DeFi has always been a bullish catalyst for Ethereum, and they are synonymous with Ethereum because it powers several digital currencies within the decentralised finance market. Ethereum hosts over 200,000 ERC tokens, many of which are among the leading 100 digital currencies. DeFi enables blockchain users to trade, lend, or borrow assets directly from each other without the involvement of a bank. In addition, it works like a platform that unlocks value in a creative way for services and products like payments, loans, and insurance.
Ethereum is also one of the most popular digital currencies in the sector because it has a disinflationary supply. Bitcoin has often been named a store of value and investment against inflation because it will have a limited supply of 21 million coins.
Ethereum is different because it will have unlimited coins, but only a finite number are released yearly. This removes Bitcoin’s perceived scarcity, bringing it a higher value. Ethereum’s supply increases according to the disinflationary mechanism, revised as the blockchain matures.
Speed and scalability
Ethereum’s speed and scalability are also among the factors that make it a popular blockchain. Ethereum blocks are around 10 to 15 seconds, while Bitcoin’s are around 10 minutes. Additionally, bitcoin processes a transaction in around 40 minutes, but Ethereum needs around 5 minutes to complete it.
Ethereum guarantees speed, which is expected to get even better as the network implements new upgrades.
Ethereum can be compared to an infrastructure which could revolutionise finance and technology. Ethereum-based apps could affect markets, governance, public services, and many others. Specialists believe that the Ethereum platform could be used to change how some industries work, and people connect.