ETH Shanghai Upgrade
Since its launch in 2015, the Ethereum blockchain has implemented several major upgrades as follows: Byzantium (2017), Constantinople (2019), St. Petersburg (2019), Istanbul (2019), Berlin (2021) and London (2021). Each upgrade covers an important event in the history of the evolution of Ethereum and the upcoming “Shanghai Upgrade” is no exception.
The Shanghai Upgrade is the last milestone in the Ethereum transition from PoW to PoS, which will open up the unstake feature of ETH. Previously, in December 2020, Ethereum released its Beacon Chain, which opened the Stake function of ETH and entered the era of dual-track system of PoS and PoW. In September 2022, Ethereum completed The Merge, which transformed it into PoS chain and ended algorithmic mining. However, the unstake function will not be officially opened until the Shanghai upgrade is completed.
According to the official Ethereum network data, the number of PoS verifiers in the Ethereum network has exceeded 510,000, and the total number of stakings exceeds 16.4 Million ETH! All these ETH are now “locked” in the Ethereum network, waiting for the Shanghai upgrade to open unstake before they can be withdrawn. As a result, the Shanghai Upgrade has become a highly anticipated event in the Ethereum ecosystem.
In October 2022, in preparation for the Shanghai Upgrade, Ethereum developers launched a test network codenamed “Shandong” to find bugs and potential problems. On February 7, 2023, Ethereum launched the Shanghai upgrade on the testnet codenamed “ZheJiang” and successfully simulated the unstake process. Next, the development team completed the Sepolia testnet upgrade (February 28) and the Goerli testnet upgrade (March 14).
According to the latest news released by the official Ethereum, the Ethereum mainnet will be officially upgraded at block height 6209536 (22:27 pm GMT on April 12). At that time, the unstake function on the mainnet will be officially opened.
Impact of Shanghai Upgrade
Some may think that the upgrade to open unstake in Shanghai will cause a sell-off in ETH. But in fact, according to the recent price performance of ETH, most investors have the opposite expectation. There are two reasons for this: Firstly, after the unstake is opened, there is a limit to the number of unstakes per day, which is not a big impact compared to the daily trading volume of ETH; secondly, the enthusiasm of ETH holders to participate in staking will increase significantly. Staking ratios for mainstream PoS chains are generally between 40% and 70%, while the staking ratio for ETH is currently only about 16%, leaving plenty of room for growth.
Based on the expectation of a huge new wave of stakings, staking-related services such as Liquid Staking, have gained the attention of investors, and considering Ethereum can count on dozens of liquid staking protocols, this narrative has growth.
Liquid Staking protocols issue a voucher token, a sort of receipt passes, for those users who want to participate in Stake keeping their liquidity, which can be freely circulated, traded at any time, repackaged or involved in more interest-bearing activities. In this way, Liquid Staking allows users to earn Staking rewards without locking up their liquidity, thereby increasing the efficiency of their capital.
Bifrost is a protocol that has been in the Liquid Staking game since 2019. At the time of Ethereum’s beacon chain release, Bifrost went live with vETH 1.0 related contracts and released an liquid staking token: vETH. vETH’s minted volume is currently 20,094, ranking steadily in the top 10 of all types of ETH liquid staking token.
vETH is run on the Bifrost Staking Liquidity Protocol (SLP) contract, which allows users to lock in ETH for vETH minting at any time without any basic knowledge or technical ability regarding verifying nodes.
vETH is one of the assets in the Bifrost vToken collection. Bifrost is a parachain to Polkadot, and by using the bridge between Ethereum and Polkadot, vETH can easily move between Polkadot and Polkadot as a native asset in both the EVM environment on Ethereum and the Substrate environment of the Bifrost chain. vETH holders can take full advantage of the interest-bearing opportunities in both and gain greater returns.
With the implementation of the Shanghai upgrade, the vETH contract will be upgraded simultaneously, vETH2.0 will be launched, and the unstake function will be enabled. vETH holders will be able to redeem the originally staked ETH with interest. Different from vETH 1.0, the vETH 2.0 contract is an upgradeable contract, which means that it will add more features through upgrades in the future to help vETH achieve higher security, decentralization and more practicality.
As soon as the vETH 2.0 contract will go live, the vETH payout will change. Previously, vETH payouts were distributed in the form of Rebase, with payouts made in the form of vETH to the vETH holder’s account and required a manual Claim by these users.
This format was not effective to integrate vETH with major DeFi applications, as a Token that requires a manual Claim is a non-standard Token for DeFi protocols. With the deployment of the vETH 2.0 contract, gains will be paid out via exchange rate escalation, eliminating the need for vETH holders to manually Claim. vETH’s Staking gain will be automatically reflected in the ETH’s local price.
It is expected that vETH 2.0 will add a fast redemption feature. With this feature, user-initiated unstake requests are matched with new stake requests in the system to shorten the unstake waiting period. This feature is one of the basic features of the vToken family of tokens. (Of course, users can also swap vETH back to ETH at any time via the vETH/ETH liquidity pool, at a possible discount, which was also possible with the previous version of vETH 1.0).
vETH 2.0 will also plan to incorporate DVT (Distributed Validator Technology) for more robust node risk control and a higher degree of automation.
To learn more about vETH 2.0: https://wiki.bifrost.finance/staking-liquidity-protocol-slp/veth
vETH 2.0 Go Live Steps
The vETH2.0 contract will be tested on the Zhejiang testnet, the Sepolia testnet, and the Goerli testnet, and a code audit will be started at the same time. After the testing and code audit are completed, we expect to officially launch the vETH2.0 contract on the mainnet at 12:00 on April 6, 2023. The vETH2.0 go-live timeline is as follows:
- At 12:00 on March 31 (UTC+8), the claim function of vETH 1.0 has been disabled. After that, the reward were released through the vETH 2.0 increase. The first increase in the vETH 2.0 exchange rate is within 24 hours of the successful upgrade of ETH Shanghai (the reward will be issued in one go through the first exchange rate increase during the period from 12:00 on March 31 to the successful upgrade of Shanghai)
- April 6 18:00 (UTC+8), vETH2.0 contract will be officially online, users will be able to swap their vETH1.0 1:1 for vETH2.0.
The swap portal will be open for a long time.
- At 18:00 on April 10th (UTC +8) vETH/ETH Farming will be launched on bifrost.app, and LP staked to the Bifrost protocol will be rewarded with xcBNC (the EVM version of BNC)
- April 13, 6:27 (UTC+8): After the Shanghai upgrade is completed, Bifrost will open vETH 2.0 redemption after the ETH mainnet is running stably. The specific time will be announced.
- Token address of vETH 2.0: https://etherscan.io/token/0x4bc3263eb5bb2ef7ad9ab6fb68be80e43b43801f
- Token address of vETH 1.0: https://etherscan.io/token/0xc3d088842dcf02c13699f936bb83dfbbc6f721ab
- vETH 2.0 audit report: https://github.com/bifrost-finance/bifrost-vETH-2.0/tree/main/audit
- vETH 2.0 open source code: https://github.com/bifrost-finance/bifrost-vETH-2.0
BNC is a native asset of the Bifrost chain and cannot be used directly in the EVM ecosystem: it needs a cross-chain wrapped version of BNC - xcBNC. XC cross-chain allows users to cross-chain BNC from the Bifrost chain to the Moonriver chain, and after cross-chaining, BNC is automatically converted to xcBNC. xcBNC can then be cross-chained to other EVM chains, including Ethereum, via Multi-chain.
Token address of xcBNC: https://etherscan.io/token/0x1fd097b75679a2896c007da75f4c74598a46bb7e
Bifrost is keeping pace with the Shanghai Upgrade, step by step, testing, auditing, going live with vETH contracts and turning on liquidity incentives. The new vETH2.0 will be more secure, scalable and composable. Although the migration from vETH1.0 to vETH2.0 is non-mandatory and not time-limited, we strongly recommend that you complete the migration as soon as possible because
vETH2.0/ETH will become the main official liquidity pool and will be more liquid; participation in liquidity Farming of vETH2.0/ETH will be rewarded with xcBNC; vETH2.0 is an EVM and Substrate dual environment asset that can easily move between the EVM ecosystem and the Polkadot ecosystem, enjoying interest-generating opportunities on both sides. We will release detailed operation guidelines for replacing vETH2.0 and participating in vETH/ETH liquidity farming later, so please stay tuned.