A digital asset

investment fund

Viska is an alternative investment fund based in Iceland that invests in digital assets.

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The biggest Ethereum update of the year

The Shanghai upgrade occurred on the Ethereum blockchain on April 12 and is the first major upgrade to Ethereum after the proof-of-work (mining) for transaction verification was discontinued. The so-called "staking" reward system took over. Staking involves Ethereum owners committing their Ethereum to the system (staking) and earning a return. Up to now, owners have been bound with their assets and returns within the system for an unspecified time. Viska wrote about this upgrade in September 2022, and you can read more about it here.

With the Shanghai upgrade, various technical features were introduced that underpin further changes to the system, focusing on increased transaction speed and performance. An essential change in the upgrade involves releasing the units that have been staked in the system. Those who have performed transaction confirmations on the system and received a reward for this work will be able to choose to sell these assets if they wish. There has been much discussion about how much Ethereum will be sold in the market, but since April 12, the price per unit has increased by 12% against the US dollar. Thus, the market's expectations of potential sales pressure have been overestimated.

After the upgrade, investors can continue accruing Ethereum within the system but withdraw their units at will. The returns within the system can be variable but have been about 4% per year. The main difference between this method compared to accruing interest through deposits in the banking system is that the return on the Ethereum system is a peer-to-peer return in a decentralized financial system instead of depositing funds into a bank. In a recent banking run in the United States, depositors found that some banks had allocated deposits to riskier investments, which in some cases led to losses exceeding the bank's equity.

Overall, the Ethereum Shanghai upgrade is a major step forward for the Ethereum system, and it is expected to improve its performance and security significantly. Further upgrades will subsequently see the light of day, and this development has strengthened the Ethereum system as the leading solution for using smart contracts on blockchains. Ethereum will likely play a significant role in linking blockchains and the financial system through decentralized finance in the future.

More information about the Shanghai upgrade can be found here:

Guðlaugur Steinarr GíslasonCIO - Founding Partner