Ethereum: Shadow Fork and Stealth Addresses affect the network by...

Ethereum developers release Withdrawal-Mainnet-Shadow-Fork-1 ahead of Shanghai.
Vitalik Buterin offers stealth addresses to solve privacy issues on the network.

Ethereum Developers [ETH] made significant progress towards rolling out the Shanghai Update by creating a “Shadow Fork”. Additionally, Vitalik Buterin suggested a method to ensure transaction privacy on the Ethereum network in a related development. What effects could these developments have on the network and the EPF?

Read Ethereum [ETH] Price Prediction 2023-24

A fork before the fork

An Ethereum engineer named Marius Van Der Wijden announced the Mainnet Shadow Fork on January 23. Wijden planned to introduce rogue nodes into the testnet that would send faulty blocks and messages to trick other nodes into joining a fake fork of the network.

Withdrawal-Mainnet-Shadow-Fork-1 is being finalized 🚀🚀🚀

It started with some issues because the config was not applied correctly on geth (we prohibit overriding the mainnet config). The configuration is applied correctly and all nodes agree. We’re going to start some evil knots.

— MariusVanDerWijden (@vdWijden) January 23, 2023

This testnet was dubbed Withdrawal-Mainnet-Shadow-Fork-1. It also seemed to simulate the withdrawal requirements of staked Ether (ETH).

A shadow fork is an interim test fork that implements some of the protocol changes needed before the full Shanghai hard fork. Before the big move to a proof-of-stake network, known as Merge, that happened last year. Ethereum used several phantom forks for testing.

Vitalik goes stealthy

The founder and current CEO of Ethereum, Vitalik Buterin, also proposed the implementation of a feature which he named “Stealth Addresses”. In an article, while highlighting the difficulty of ensuring privacy in the ecosystem, Buterin said:

“Fixing this state of affairs is a serious matter.”

Additionally, stealth addresses would be a way to conceal true ownership of non-fungible tokens (NFTs) and domain names registered using the Ethereum Name Service (ENS). Stealth addresses are created by wallets, which scramble public key addresses for anonymous transactions. A unique key “spending key” is required to access these incognito exchanges.

If the development team’s shadow fork proves successful, users could withdraw their staked ETH without fear of the network being compromised. The lack of privacy issues on the Ethereum network could also be solved if the stealth address suggested by Vitalik could be deployed. If these updates increase the popularity of the network, the value of ETH may increase.

How much is 1,10,100 ETH worth today?

Decent development activity, but prices are falling

The development activity indicator on Santiment could be used to get an idea of how busy developers are. At the time of this writing, the Metric indicated that the developer contribution had almost reached 50. As the Shanghai update approaches, this could very well climb further.

Source: Santiment

On the daily timescale chart, Ethereum was trading at around $1,618. Moreover, the price continued the little decline it had seen in the previous 48 hours – up to press time – dropping nearly 0.50%.

However, it was evident that the price action was above the long and short moving averages (blue and yellow lines). The support level was also indicated by the yellow and blue lines.