What's in and what's out for Ethereum's Shanghai upgrade

A tentative timeline of March 2023 has been set for the Shanghai upgrade which will enable staking withdrawals, a list of EIPs have also been packaged in but EIP-4844 didn't make the cut.

Ethereum core developers have opted to prioritize the enabling of staking withdrawals via the Shanghai upgrade first before implementing The Surge-related Ethereum Improvement Proposal (EIP)-4884.

As reported by Cointelegraph, the next key milestone on Ethereum’s roadmap is the Shanghai upgrade, which will enable withdrawals for ETH stakers/validators from the Beacon Chain — among other things.

EIP-4884 is also important and was initially expected to be packaged in with Shanghai, introducing “proto-danksharding” to significantly enhance Layer 2 rollup scalability (The Surge) ahead of the full implementation of the major Sharding upgrade late next year.

However, according to Ethereum core developer Tim Beiko at the latest Ethereum Core Developers Meeting on Dec. 8, the ultimate consensus was to focus on Shanghai first to avoid any potential delays if EIP-4844 were to not be ready in time.

In a rundown thread on Twitter, Beiko noted that everyone agreed to “(1) seeing Shanghai happen quickly, ideally around March and (2) following this with a fork centered around EIP-4844.”

While EIP-4844 won't be included, the devs have agreed to include a set of EIPs that essentially upgrade the Ethereum Virtual Machine (EVM), including introducing a new EVM contract format, code/data separations and new operation codes.

Beiko noted that as these upgrades, known as EVM Object Format (EOF) are quite easy to walk back and remove from Shanghai, if devs haven’t finished working on it when Shanghai is ready for implementation, then EOF will simply be removed and shipped later.

Additionally, a set of previously agreed upon EIPs will roll out alongside Shanghai, the list includes EIP-3651: Warm Coinbase, EIP-3855: PUSH0 instruction, EIP-3860: Limit and meter initcode and EIP-4895: Beacon chain push withdrawals as operations.

So, that's where we landed for Shanghai: Withdrawals, EOF & a few already implemented EIPs (PUSH0, Warm COINBASE, Limit/Meter initcode) are what we will go for. If by January, we don't meet the EOF milestones mentioned above, we'll remove it from Shanghai so withdrawals ship ASAP

— timbeiko.eth (@TimBeiko) December 8, 2022

EIP-3651: Warm Coinbase in particular will potentially have some cost reduction benefits for the network. Not to be confused with the name of crypto exchange, Coinbase in this context refers to the name of the software that builders use to receive new tokens on the network.

Every new transaction on the platform needs to interact with the Coinbase software multiple times, however, the initial transactions start off more expensive as Coinbase essentially needs time to warm up.

With the new EIP implementation, this won’t be the case anymore and thus lowering gas fees when builders are interacting with it.

As per the Ethereum Foundation, Sharding is a multi-phase upgrade designed to significantly ramp up Ethereum’s “scalability and capacity” via the implementation of shard chains, which will give the network significantly “more capacity to store and access data.”

With the improved data storage capabilities, this will essentially enable Layer 2 solutions to offer much lower transaction fees.

After all of this is completed, the network's next major event and final part of the roadmap is the Sharding upgrade, which is expected to roll out over 2023 and 2024.