9th December 2022 > > Shanghai.

tl;dr

A brief look at progress towards the next step on the journey to ETH 2.0.

Market Snap

Market Wrap

The crypto popular press is suggesting that this smallish overnight move was due to a short squeeze, but I see little evidence of that. Perpetual futures funding rates have been short driven for a decent amount of time, so the law of averages tells us that we should expect cascading liquidations sometime soon. But I don’t think it has happened yet.

Bloomberg is reporting that investment managers are expecting double digit stock gains in 2023, which is somewhat at odds with the inverted yield curve. I know which one of those two options I prefer to be correct.

Curious Cryptos’ Commentary — Ethereum 2.0 update

Following the success of The Merge in recent months, the Ethereum development team have been furiously working on the Shanghai upgrade.

I am reliably informed that Shanghai – whose official name is EIP (Ethereum Improvement Protocol) 4844 – will introduce “proto-danksharding” to the network.

Hm.

I am also reliably informed that Shanghai will introduce “Blobs” (Binary Large Objects).

Hm again.

Apparently, those of you with a programming bent - specifically JavaScript or Python – are already familiar with the latter, but I suspect most of you are like me, and don’t have a clue.

Feeling a bit foolish trying to write about something of which I know nothing (ha, ha, very funny there at the back), I went on a knowledge hunt. I found this a relatively easily accessible resource that gives non-techies like us some superficial insight into these matters:

https://www.alchemy.com/overviews/danksharding

…

The important thing for us is that Shanghai is now slated for a May or June 2023 launch. IT deadlines usually slip, so no-one is going to promise a date this far out, but progress is being made.

The immediate impact of Shanghai is that Layer-2 solutions will become faster, with greater scalability, and will become cheaper. ETH fees will not be impacted to the downside at this time.

Blobs will also help to curb the pernicious effects of MEV (Maximum Extractable Value) in which an algorithm automatically helps miners to front-run transactions effectively transferring value from users to the miners over and above the gas fees that represent block rewards.

This is patently a good thing, and is for everyone’s benefit, including the miners, though they may not see it that way.

Finally, all of those who staked ETH in ETH staking pools – as discussed in the CCC on 26th November – will be able to unstake to receive their staking rewards. With over 10% of ETH supply currently locked in illiquid staking, this event promises to increase liquidity for ETH, which again is always a positive.