Ethereum Launches Testnet to Begin Work on Shanghai Upgrade

Fresh off the success of a flawlessly-implemented merge event last month, Ethereum’s core developers are beginning to turn their attention to the network’s next, highly anticipated upgrade: Shanghai. 

The Ethereum Foundation on Friday announced the launch of a pre-Shanghai testnet it's calling “Shandong.” Shandong will serve as a testing ground for numerous Ethereum Improvement Proposals (EIPs), which Ethereum’s core developers will build, tweak, and ultimately, whittle down to the select number of updates that will be included in Shanghai when it eventually goes live. 

Core developers previously confirmed to Decrypt that Shanghai is expected to launch by September 2023 at the latest, though a firm timeline has not yet been agreed upon among Ethereum’s core developers. 

Which proposals will be included in Shanghai also remains an unresolved question. Multiple factions of core developers have expressed different priorities for what they believe is most necessary to include in the upgrade. 

Perhaps the biggest-ticket update most likely to be included in Shanghai is EIP-4895, which would allow individuals and entities that hold staked ETH with Ethereum to withdraw it. Last month, the merge transitioned the Ethereum network to a proof of stake mechanism, by which users can now deposit stores of pre-existing ETH in order to generate new ETH. That deposited, or staked, ETH is currently immovable, however. EIP-4895 would allow users to withdraw their staked ETH and earnings.

Another much-discussed update that some developers hope to include in Shanghai is proto-danksharding, a preliminary version of a process that would allow rollups—the tools that offload much of the Ethereum’s mainnet transaction traffic, making transactions cheaper and faster—to verify huge amounts of data by only sampling small pieces. 

The update would dramatically increase the speed and ease with which massive quantities of Ethereum transactions could be processed on layer-2 networks such as Arbitrum and Optimism. Ethereum co-founder Vitalik Buterin has emphasized that perfecting the speed and cost of transactions on such layer-2 networks are essential to Ethereum’s future. 

Though danksharding capability is eagerly awaited by many Ethereum developers and users, adding it to Shanghai would dramatically increase the time needed to test and perfect the upgrade. 

With billions of dollars of staked ETH trapped on Ethereum until Shanghai is implemented, the network’s developers may ultimately determine a more pared down upgrade is necessary to hasten the software’s release. 

Those decisions, though, have not yet been made. An Ethereum core developer told Decrypt that productive conversations were had among the network’s core developers in Bogota this last week, at the network’s marquee conference, Devcon, but no final decisions about what EIPs to include in Shanghai were reached. 

Until that time, Shangdong will likely prove itself to be an important testing ground that will help Ethereum’s developers determine which additions to Shanghai will be feasible, and which will not.