Ethereum Completes Transition to Proof of Stake with Shapella Update

Ethereum, one of the leading blockchains, achieved a significant milestone as it completed its transition from Proof of Work (PoW) to Proof of Stake (PoS) with the successful implementation of the Shapella update on Wednesday night.

The Shapella update, accompanied by minor optimizations, marks a crucial step forward for Ethereum, allowing staking participants to withdraw their deposits along with interest. This update required participants in the decentralized network to upgrade to newer versions of client software through a hard fork process.

The transition from PoW to PoS began with participants transferring Ether from the PoW chain to the Beacon Chain, effectively becoming validators of new blockchain blocks. The Beacon Chain ensures consensus under the PoS mechanism. Initially, both chains operated independently, with Ether transfers to the Beacon Chain being unidirectional. Once staked, participants couldn't retrieve their deposits.

In September 2022, Ethereum merged both chains in an update known as Merge, replacing PoW with PoS as the consensus mechanism. However, until the recent protocol update, there was no mechanism for staking participants to reclaim their deposits. The Shapella update rectified this, enabling participants to retrieve their staking deposits.

With this transition, Ethereum's developers view the shift from the energy-intensive PoW consensus process to the more eco-friendly PoS as complete, marking a significant milestone in the cryptocurrency's evolution.