Shanghai hard fork “disappointed” in terms of activity on Ethereum

The Shanghai update to the Ethereum network, activated in April, does not seem to have led to the expected increase in activity on the blockchain. CoinDesk writes about this with reference to a JPMorgan report.

The implementation of the hard fork opened up the possibility of withdrawing the staked cryptocurrency.

“Although the migration from Proof-of-Work to Proof-of-Stake as a result of The Merge led to a drop in network energy consumption of more than 99%, a decrease in the supply of Ether and a sharp increase in staking volumes, on-chain activity indicators were quite disappointing,” – said bank analysts led by Nikolaos Panigirtzoglou.

Experts noted the drop after the hard fork:

• daily number of transactions by 12%;
• the number of daily active addresses by almost 20%;
• the volume of locked assets (TVL) in DeFi protocols of funds by approximately 8%.

The decline in activity suggests that the bearish impacts of the past year, including the collapse of Terra and FTX, tightening US regulation and the contraction of the stablecoin segment, have outweighed the potentially positive impact of Shanghai, according to JPMorgan experts.

Despite a 50% increase in the volume of staking ETH since Shanghai, which increases the security of the network, “the share of LSD protocols like Lido remains alarmingly high, raising questions of centralization,” the analysts added.

In their opinion, hopes for a significant increase in on-chain activity in Ethereum are now associated with the upcoming implementation EIP-4844, known as Proto-Danksharding.

The option scales the blockchain by introducing a new type of transaction for large arrays of binary data (blobs) and organizing their storage. This is intended to reduce commissions for L2 solutions based on Rollups technology.

The improvement proposal is included in the EIP package, which the developers activate during the Dencun (Deneb-Cancun) hard fork.

During a video conference held on September 21, developer Tim Beiko from the Ethereum Foundation admitted that the update planned for the fourth quarter would be postponed to early 2024. His concerns were caused by delays in the deployment of Dencun on public test networks.

Let us remind you that ForkLog spoke about the roadmap for the development of Ethereum in educational cards.

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