Robert Steinadler, a month ago
The Shanghai upgrade is the next important step for Ethereum and its economy. But before the upgrade can be implemented a lot of thorough testing needs to be done. Some of the tests were held successfully and most spectators anticipate that Shanghai can be rolled out once all other tests are finished. Interestingly enough, a situation has developed on Goerli, the last testnet that Shanghai needs to be tested with.
Why is Shanghai so important for Ethereum and why is the price for testnet ETH on Goerli skyrocketing?
The upgrade is meant to unlock staked Ether and make it available to the holders. With the Merge, both the beacon chain and the Ethereum chain were melted together in September 2022. Therefore, Shanghai is not only another upgrade but also an important economic factor for investors holding Ether which is still locked.
Analysts as well as the broader Ethereum community have argued about the question of whether this is a bullish or bearish event. On the one hand, investors could sell their unlocked ETH which could lead to a situation in which the price is suppressed. On the one hand, Ethereum staking becomes more attractive to bigger investors, since their investments enjoy liquidity.
No matter where you position yourself on the question of how this is going to impact the market, Shanghai will change how things work for Ethereum stakers. Tests on the Sepolia testnet were already successful and this is the second out of three tests that have to be held before the mainnet launch. The last test has to run on Goerli which appears to have problems of its own.
The Goerli testnet is completely apart from the Ethereum mainnet and so is the supply of testnet ETH on Goerli that is known under the ticker gETH. The gETH tokens are intrinsically worthless since they only serve a purpose for testing and so does everything else on Goerli. The network simply mimics Ethereum to provide an environment that behaves the same.
Recently, gETH reached a price of $1,60 because traders started speculating on an otherwise worthless asset. This is possible because LayerZero wanted to create an opportunity for developers to get gETH easier by buying it on Uniswap for a few cents. Otherwise, devs need to rely on faucets which can be time-consuming but is still providing the gETH for free. It seems that this shortcut that was meant to help took off in the wrong direction. At the time of writing, the price has been corrected to $0,31.
The good news is that Goerli is already deprecated since January and will run for another 12 months until everybody moved to Sepolia. It appears that the current situation with price speculation testnet ETH will resolve itself sooner or later.
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