This is Bloomberg Crypto, a daily Bloomberg Ihad podcast, and I'm Stacy Marie Ishmael, Managing editor of Crypto for Bloomberg News. It's Monday, February six. It's almost time for another blockchain software upgrade on the Ethereum network. Yes again. Nearly five months ago, the Ethereum blockchain successfully completed what was at the time a very complicated and years in the making update, called the Merge. It allowed the blockchain to move from validating transactions using computers that were very energy intensive two computers and a process that was a little bit less energy intensive, or actually a lot less energy intensive. That switch cut if Arium's power consumption by more according to various calculations. And after that upgrade, the price of Ether, the token that trades on the Ethereum blockchain, rallied a fair amount, but it's since fallen by about fifteen or so percent. Now the software developers who work on Ethereum are gearing up for another upgrade. This one is called Shanghai, and the reason that people care about it is because it will allow the tokens that are used to order those transactions on the brock chain to be withdrawn Basically, it means that all of those tokens being used to order transactions on the blockchain that can't be withdrawn will once again be available and accessible to their owners. Here to talk more about what's coming in the Shanghai upgrade is Bloomberg Proposa Olga, Karif Olga, Welcome back to the podcast. I feel like there's always something going on with the Ethereum blockchain, so true, it seems like can upgrade after an upgrade, after an upgrade. So you know, several months ago we had you and our colleague David Pan on the show a few times to talk about what was called the merge. We've been waiting for this upgrade for years. This change, known as a merge, is a software upgrade. It's a Theium's transition from proof of work to proof of state. People were like, well, work will be a disaster, and it went super smoothly. The upgrade will allow Themium developers to introduce new features. This update will see the Etherium may net combined with the Beacon chain, which is a proof of stake system and is expected to be more eco friendly by minimizing the environment. As a result of that going super smoothly. It now sounds like Ethereum much like any kind of software project has this roadmap that requires you know, app updates pretty much, what's the next big update that's coming to the blockchain. So the next big upgrade everybody is talking about is called chain Hai. It's expected to happen in March. But you know, as with everything Ethereum, it might still the timeline might still slide um and essentially it's um. It's it's the next step after the merge that should uh sort of help Ethereum become a more attractive ecosystem for you know, everybody, from investors to developers. Why so, what the merge did was it moved Ethereum from being run by so called miners or you know, very powerful computers that helped order transactions on the blockchain to a blockchain that takes a lot less energy and sort of After the merge, what happened is that Ethereum started ordering transactions using so called staked coins. Essentially, anybody who has Ether can uh stake it or put it into special staking wallet. What Shanghai does is it allows people who staked their Ether into the special staking wallets to take it out believe it or not. If you right now, if you've staked your ether, it's stuck there and you cannot take it out, that seems less than ideal. Why why do people agree to do that? You know, there's a lot of trust in ethereum developers who have proven time after time that they do what they say they will do. Plus people who stake their coins they aren't yield, which fluctuates. For instance, in the fullts at one point it was about ten percent um and right now it's around six. So it's it's pretty substantial, uh, you know, especially in today's uh unpredictable you know, often sort of down crypto markets. Mm hmmm. So if I'm hearing you correctly, it sounds like one there was a lot of trust in the ecosystem. There was a lot of like developer belief that this is the right thing to do. These folks are going to do the right thing. We're comfortable, you know, as you say, staking our ethery essentially like putting our hard earned tokens away for a while in service of the cause the community, the greater good. Pick a motivating factor, and it also sounds like while you're doing good for the community, you're getting free money, absolutely, and that's exactly what it is. You know, after the crypto crash of last year where a lot of crypto lenders essentially went up in flames, or most of them rather. Um, you know, there aren't a lot of places to put your crypto into and to earn yield. And for much of last year, crypto prices have been trending down, like in the double dgets. So um, you know, for people who are looking for safer you know, relatively safer returns on their coins while they're sitting there waiting for another bullmarket. Um, this has been a pretty attractive option, not without its risks. So and what are some of those risks that you just don't get your money back? Right? So, one of the risks risks is that shang Hai gets delayed, you know, the subgrade that allows you to withdraw your tokens could get delayed still by some unexpected bugs or something else. Another risk is that while your tokens are sitting there waiting to get unlocked, eventually, you know, something crazy happens in the crypto markets and you can't withdraw, You can't sort of make a smart move to save your money. So that's another risk. So let's assume because crypto is full of optimists, but everything goes completely smoothly, there's no downtime. Everything's great, people get their staked ether back. What happens next, what comes after? So what comes after? You know a lot of people have very rosy expectations for what happens after Shanghai. They think that they'll be able to take their money out of the staking wallets, you know, immediately whenever they want. People who are I guess more realistic believe that it's gonna it could take days and weeks and perhaps even months to get to unlock your tokens because there might be a line, and especially right after Shanghai, as this unlock functionality first appears, you know, there could be a rush to take money out. A lot of people lost money in the crypto markets the last year. They might need it, so there could be a lot of withdrawals and a very long line. So you know, this is something to keep in mind. This is not like in and on sort of functionality where you can just everybody can just unstake all at once. Now, if you are, say a normal person who's not a crypto reporter or the host of a crypto podcast, and you're thinking, does the Shanghai upgrade me and Ether is gonna go up, down or sideways? What's the answer. So it's one of those expected upgrades. Everybody has known about it for months, essentially how it often happens, and this is what happened with the merge as well, the previous upgrade, where while Ether basically price ran up ahead of the news, and then as merge happened, it plunged as investors wanted, you know, to realize their profits from making this bet. And a lot of people believe this is what could happen here. And this concern is not just Ether but a whole There is a whole, big ecosystem of tokens related to steak that this uh sort of selling the news um expectation could impact as well. So there's an expectation that this run up will continue until Shanghai happens, and then some of these prices could uh come down back to earth again. So so there's a lot of um gameplay involved here as people try to speculate on on Shane Hai coming up, you'll hear more from Bloomberg reports Olga Cariif on how ethereums next expected upgrade could affect the industry. We'll be right back. See this is why you never ask your reposto what a price is gonna do, because I'll give you like a very detailed technical explanation, but then not tell you if it's gonna go up outside, which do we know we are not allowed anyway, So this is like the ideal way to handle this question. Um. Just as kind of a final thing. You know, we saw just in the past couple of weeks that n f t s are potentially coming to bitcoin, which has shocked and appalled Bitcoin purists, but other people are like, whoa more ways to make money? And f t s obviously are one of the big defining use cases of Ethereum. Most n f t s today are built on top of either Ethereum itself or one of kind of you know, the associated slash spinoff blockchains. What are the kinds of things that Ethereum developers are thinking about beyond like upgrades and bug fixes, Are there any really transformational new features that might be coming to the blockchain to continue to make it be an attractive place for software depth A whole bunch of features we're supposed to be part of Shanghai, and we're taken out at the last minute because the developers just want to get this unlocking, you know, withdrawals functionality done so right now. With n f t s, for instance, most of n f t s still live on Ethereum. There are um on Salona and a few other blockchains, but the bulk really is lives on Ethereum. And if you look at developer activity um, you know Ethereum is definitely one of the very few places to be especially in this market. Developers are thinking of a whole bunch of new types of applications. A lot of them are thinking about, for instance, social type applications with coins baked in, and um lots of other interesting use cases. During downturns is when they uh sort of come up with the next big thing. I think we're still waiting to see what it will be after this downturn, but that's at least my bed just because there is so much development still help happening here. Yeah. Yeah, this is kind of like the classic argument for why people are excited about one of our favorite buzzwords on the show, the underlying technology. All right, thank you so much. It's always a pleasure to have you on, Stacy. My pleasure is really enjoyed it. That was Bloomberg Report Olga Karif you can find more of her reporting on the Bloomberg terminal and on Bloomberg dot com, and for more check out or twice weekly newsletter Bloomberg Crypto. This is Bloomberg Crypto, a daily podcast from Bloomberg and I Heart Radio. For more shows from I Heart Radio, visit the i Heart Radio app, Apple Podcasts, or wherever you get your podcasts. Send us your comments, questions or suggestions for the show to Crypto at Bloomberg dot net. The supervising producer of Bloomberg Crypto is Vicky Vergelina. Our senior producer is Janet Babin. Our producers are Mohammed Farup and Sharon Barriro. Our associate producers are Ty Butler and Moses on Them. Desta wonder At is our engineer. Original music by Leo Sidron. I'm Stacy Marie schml to be back tomorrow

This is Bloomberg Crypto, a daily Bloomberg Ihad podcast, and I'm Stacy Marie Ishmael, Managing editor of Crypto for Bloomberg News. It's Monday, February six. It's almost time for another blockchain software upgrade on the Ethereum network. Yes again. Nearly five months ago, the Ethereum blockchain successfully completed what was at the time a very complicated and years in the making update, called the Merge. It allowed the blockchain to move from validating transactions using computers that were very energy intensive two computers and a process that was a little bit less energy intensive, or actually a lot less energy intensive. That switch cut if Arium's power consumption by more according to various calculations. And after that upgrade, the price of Ether, the token that trades on the Ethereum blockchain, rallied a fair amount, but it's since fallen by about fifteen or so percent. Now the software developers who work on Ethereum are gearing up for another upgrade. This one is called Shanghai, and the reason that people care about it is because it will allow the tokens that are used to order those transactions on the brock chain to be withdrawn Basically, it means that all of those tokens being used to order transactions on the blockchain that can't be withdrawn will once again be available and accessible to their owners. Here to talk more about what's coming in the Shanghai upgrade is Bloomberg Proposa Olga, Karif Olga, Welcome back to the podcast. I feel like there's always something going on with the Ethereum blockchain, so true, it seems like can upgrade after an upgrade, after an upgrade. So you know, several months ago we had you and our colleague David Pan on the show a few times to talk about what was called the merge. We've been waiting for this upgrade for years. This change, known as a merge, is a software upgrade. It's a Theium's transition from proof of work to proof of state. People were like, well, work will be a disaster, and it went super smoothly. The upgrade will allow Themium developers to introduce new features. This update will see the Etherium may net combined with the Beacon chain, which is a proof of stake system and is expected to be more eco friendly by minimizing the environment. As a result of that going super smoothly. It now sounds like Ethereum much like any kind of software project has this roadmap that requires you know, app updates pretty much, what's the next big update that's coming to the blockchain. So the next big upgrade everybody is talking about is called chain Hai. It's expected to happen in March. But you know, as with everything Ethereum, it might still the timeline might still slide um and essentially it's um. It's it's the next step after the merge that should uh sort of help Ethereum become a more attractive ecosystem for you know, everybody, from investors to developers. Why so, what the merge did was it moved Ethereum from being run by so called miners or you know, very powerful computers that helped order transactions on the blockchain to a blockchain that takes a lot less energy and sort of After the merge, what happened is that Ethereum started ordering transactions using so called staked coins. Essentially, anybody who has Ether can uh stake it or put it into special staking wallet. What Shanghai does is it allows people who staked their Ether into the special staking wallets to take it out believe it or not. If you right now, if you've staked your ether, it's stuck there and you cannot take it out, that seems less than ideal. Why why do people agree to do that? You know, there's a lot of trust in ethereum developers who have proven time after time that they do what they say they will do. Plus people who stake their coins they aren't yield, which fluctuates. For instance, in the fullts at one point it was about ten percent um and right now it's around six. So it's it's pretty substantial, uh, you know, especially in today's uh unpredictable you know, often sort of down crypto markets. Mm hmmm. So if I'm hearing you correctly, it sounds like one there was a lot of trust in the ecosystem. There was a lot of like developer belief that this is the right thing to do. These folks are going to do the right thing. We're comfortable, you know, as you say, staking our ethery essentially like putting our hard earned tokens away for a while in service of the cause the community, the greater good. Pick a motivating factor, and it also sounds like while you're doing good for the community, you're getting free money, absolutely, and that's exactly what it is. You know, after the crypto crash of last year where a lot of crypto lenders essentially went up in flames, or most of them rather. Um, you know, there aren't a lot of places to put your crypto into and to earn yield. And for much of last year, crypto prices have been trending down, like in the double dgets. So um, you know, for people who are looking for safer you know, relatively safer returns on their coins while they're sitting there waiting for another bullmarket. Um, this has been a pretty attractive option, not without its risks. So and what are some of those risks that you just don't get your money back? Right? So, one of the risks risks is that shang Hai gets delayed, you know, the subgrade that allows you to withdraw your tokens could get delayed still by some unexpected bugs or something else. Another risk is that while your tokens are sitting there waiting to get unlocked, eventually, you know, something crazy happens in the crypto markets and you can't withdraw, You can't sort of make a smart move to save your money. So that's another risk. So let's assume because crypto is full of optimists, but everything goes completely smoothly, there's no downtime. Everything's great, people get their staked ether back. What happens next, what comes after? So what comes after? You know a lot of people have very rosy expectations for what happens after Shanghai. They think that they'll be able to take their money out of the staking wallets, you know, immediately whenever they want. People who are I guess more realistic believe that it's gonna it could take days and weeks and perhaps even months to get to unlock your tokens because there might be a line, and especially right after Shanghai, as this unlock functionality first appears, you know, there could be a rush to take money out. A lot of people lost money in the crypto markets the last year. They might need it, so there could be a lot of withdrawals and a very long line. So you know, this is something to keep in mind. This is not like in and on sort of functionality where you can just everybody can just unstake all at once. Now, if you are, say a normal person who's not a crypto reporter or the host of a crypto podcast, and you're thinking, does the Shanghai upgrade me and Ether is gonna go up, down or sideways? What's the answer. So it's one of those expected upgrades. Everybody has known about it for months, essentially how it often happens, and this is what happened with the merge as well, the previous upgrade, where while Ether basically price ran up ahead of the news, and then as merge happened, it plunged as investors wanted, you know, to realize their profits from making this bet. And a lot of people believe this is what could happen here. And this concern is not just Ether but a whole There is a whole, big ecosystem of tokens related to steak that this uh sort of selling the news um expectation could impact as well. So there's an expectation that this run up will continue until Shanghai happens, and then some of these prices could uh come down back to earth again. So so there's a lot of um gameplay involved here as people try to speculate on on Shane Hai coming up, you'll hear more from Bloomberg reports Olga Cariif on how ethereums next expected upgrade could affect the industry. We'll be right back. See this is why you never ask your reposto what a price is gonna do, because I'll give you like a very detailed technical explanation, but then not tell you if it's gonna go up outside, which do we know we are not allowed anyway, So this is like the ideal way to handle this question. Um. Just as kind of a final thing. You know, we saw just in the past couple of weeks that n f t s are potentially coming to bitcoin, which has shocked and appalled Bitcoin purists, but other people are like, whoa more ways to make money? And f t s obviously are one of the big defining use cases of Ethereum. Most n f t s today are built on top of either Ethereum itself or one of kind of you know, the associated slash spinoff blockchains. What are the kinds of things that Ethereum developers are thinking about beyond like upgrades and bug fixes, Are there any really transformational new features that might be coming to the blockchain to continue to make it be an attractive place for software depth A whole bunch of features we're supposed to be part of Shanghai, and we're taken out at the last minute because the developers just want to get this unlocking, you know, withdrawals functionality done so right now. With n f t s, for instance, most of n f t s still live on Ethereum. There are um on Salona and a few other blockchains, but the bulk really is lives on Ethereum. And if you look at developer activity um, you know Ethereum is definitely one of the very few places to be especially in this market. Developers are thinking of a whole bunch of new types of applications. A lot of them are thinking about, for instance, social type applications with coins baked in, and um lots of other interesting use cases. During downturns is when they uh sort of come up with the next big thing. I think we're still waiting to see what it will be after this downturn, but that's at least my bed just because there is so much development still help happening here. Yeah. Yeah, this is kind of like the classic argument for why people are excited about one of our favorite buzzwords on the show, the underlying technology. All right, thank you so much. It's always a pleasure to have you on, Stacy. My pleasure is really enjoyed it. That was Bloomberg Report Olga Karif you can find more of her reporting on the Bloomberg terminal and on Bloomberg dot com, and for more check out or twice weekly newsletter Bloomberg Crypto. This is Bloomberg Crypto, a daily podcast from Bloomberg and I Heart Radio. For more shows from I Heart Radio, visit the i Heart Radio app, Apple Podcasts, or wherever you get your podcasts. Send us your comments, questions or suggestions for the show to Crypto at Bloomberg dot net. The supervising producer of Bloomberg Crypto is Vicky Vergelina. Our senior producer is Janet Babin. Our producers are Mohammed Farup and Sharon Barriro. Our associate producers are Ty Butler and Moses on Them. Desta wonder At is our engineer. Original music by Leo Sidron. I'm Stacy Marie schml to be back tomorrow