Ethereum Shanghai Upgrade EIP 3651 to Reduce Gas Fee

    TheMorningCrypto Desk
    TheMorningCrypto Desk
    Published on November 8, 2022 6:19 PM

    Updated on January 9, 2023 12:51 PM

    Following The Merge's successful deployment, Ethereum developers are already focusing their efforts on the next update, The Shanghai Upgrade.
    Ethereum Shanghai Upgrade EIP 3651 to Reduce Gas Fee
    Source: unsplash

    The Merge, the most recent development, has captivated cryptocurrency speculators and blockchain users for months due to its complexity. There were genuine concerns that Ethereum developers would be unable to pull it off. But now that they have, The Merge has created the groundwork for future updates that will allow Ethereum to fulfil different uses and, as a result, increase in value.

    The Shanghai Upgrade Announcement

    The Ethereum Foundation announced the list of updates included in the upcoming Upgrade on October 14. This latest update, dubbed Shanghai, is set to be released by September 2023 and will add critical features to Ethereum.

    Aside from several substantial scalability enhancements, the key event would include a few more minor Ethereum improvement proposals (EIPs).

    Here 5 Possible Ethereum Improvement Proposals per Ethereum Foundation could be:

    • EIP-3540: EVM Object Format (EOF) v1
    • EIP-3651: Warm Coinbase
    • EIP-3670: EOF - Code Validation
    • EIP-3855: PUSH0 Instruction
    • EIP-3860: Limit and Meter Initcode

    The functionality of the Upgrade

    The first potential change might be the most significant: a reduction in gas, or user, fees for Layer 2 solutionsPolygon, Arbitrum, and Optimism have gained prominence recently as Ethereum has grown in popularity. These Layer 2 solutions contribute to Ethereum becoming quicker and less expensive to use and are likely to become even more affordable.

    Another prominent feature anticipated in Shanghai is the withdrawal of staked ether tokens. Miners were replaced with validators as part of The Merge, and becoming a validator required a stake of 32 tokens. That's more than $40,000 at today's pricing. Staked ether is kept as collateral until Shanghai is revealed and cannot be withdrawn or sold. This EIP is added in the upcoming Upgrade to keep validators happy and guarantee they continue supporting the networks.

    Last but not least, an intelligent contract capability upgrade is in the works. Because smart contracts are the foundation of things like decentralized autonomous organizations (DAOs), non-fungible tokens (NFTs), and decentralized finance (DeFi), Ethereum must constantly update its operability to meet new developer requests.

    In a blog post, Ethereum developer Tim Beiko stated that this would give two significant benefits. First, it will isolate code and data, making it easier and faster for Layer 2s to process intelligent contract code. As a result, the new innovative contract feature should significantly reduce gas expenses.