The recent Shanghai upgrade on the Ethereum blockchain could potentially benefit Layer 2 blockchain protocols the most, according to crypto analyst Aaron Arnold. During an interactive session with other crypto analysts on the YouTube channel Around The Blockchain, Arnold noted that Layer 2 blockchains have the potential to outperform Ethereum in the aftermath of the upgrade. This is because most of the Layer 2 protocols have smaller market capitalization, making them more prone to volatility. Arnold predicts that Ethereum and the Layer 2 cryptos will likely grow together, but the Layer 2 coins will move faster.
Arnold also suggested a bullish outcome for Ethereum and other altcoins, noting that the Shanghai upgrade represents an “added feather to the cap” for Ethereum. He believes that the crypto community will perceive the upgrade as a step forward for the Ethereum blockchain and the Ethereum foundation. This perception will further solidify the impression that Ethereum is here to stay, improving the confidence level of the community towards the blockchain. Arnold also expects it to pass as a motivation for Layer 2 protocols built on the Ethereum blockchain, as improved confidence will encourage the adoption of their products.
With the implementation of the Shanghai upgrade, ETH users who have previously locked their tokens in the staking process can now withdraw them. The withdrawal process is, however, expected to take a couple of days due to demand and limited block space. Ethereum’s Shanghai upgrade went live on Wednesday, April 12, 2023, at 6:27 pm EST. The process finalized Ethereum’s transition to a Proof-of-Stake (PoS) consensus mechanism and unlocked over $34 billion of staked ETH.
Arnold believes that Ethereum’s Shanghai upgrade sets the stage for more implementations on the network, with the focus being on the Layer 2 protocols. These protocols represent the likely beneficiaries of the recent upgrade. Arnold predicts that the upgrade will encourage the adoption of Layer 2 protocols, as it will improve confidence in their products.
The Ethereum blockchain has been one of the most significant players in the cryptocurrency industry since its launch in 2015. It has become the go-to platform for developers looking to build decentralized applications (dApps). The platform’s smart contract functionality has made it possible to create a range of innovative blockchain-based applications. However, Ethereum has faced challenges in recent years, including scalability issues and high transaction fees.
The Shanghai upgrade is expected to address some of these challenges. The upgrade finalizes Ethereum’s transition to a Proof-of-Stake (PoS) consensus mechanism, which is expected to improve the platform’s scalability and reduce transaction fees. The upgrade is also expected to improve the security of the Ethereum network.
The Ethereum community has been eagerly anticipating the Shanghai upgrade since it was first announced. The upgrade represents a significant milestone in the platform’s development, and many in the community believe that it will pave the way for Ethereum’s continued growth and success. The upgrade is also expected to attract new developers and users to the platform, further strengthening its position in the cryptocurrency industry.
In conclusion, the recent Shanghai upgrade on the Ethereum blockchain is expected to benefit Layer 2 blockchain protocols the most. Crypto analyst Aaron Arnold believes that the upgrade will improve confidence in the Ethereum blockchain and encourage the adoption of Layer 2 protocols. With the implementation of the upgrade, ETH users who have previously locked their tokens in the staking process can now withdraw them. The upgrade is also expected to address some of the challenges faced by the Ethereum platform, including scalability issues and high transaction fees. Overall, the Shanghai upgrade represents a significant milestone in the development of the Ethereum blockchain and is expected to pave the way for its continued growth and success.