Ethereum staking testnet Zhejiang is going live tomorrow and will give users the first preview of what the withdrawal process and functionality will be like after the Shanghai upgrade.

Ethereum developers said they successfully created a copy of the blockchain – known as a “shadow fork” – to provide a testing environment ahead of a crucial upgrade known as the Shanghai hard fork.

For Ethereum stakers, the Shanghai update is a well-awaited change to Ethereum's Proof of Stake consensus mechanism. Aside from its effects on staking, it's also likely to have some ramifications on market demand for ETH.

With the “Merge”, the Ethereum blockchain successfully mastered the biggest upgrade in its history on September 15 last year. Even before the switch to Proof of Stake (PoS), investors were able to stake ETH to receive rewards.

The Shanghai upgrade for Ethereum, set to launch in March, is causing excitement in the crypto community for its potential impact on liquid staking derivatives (LSDs).

Ethereum developers plan to release a public test network for the Shanghai upgrade, which will include code allowing withdrawals of ether staked in the Beacon Chain since December 2020, by the end of February.

The crypto market witnessed the DeFi summer of 2020, where decentralized finance applications like Compound and Uniswap turned Ether (ETH) and Bitcoin (BTC) into yield-bearing assets via yield farming and liquidity mining rewards. The price of Ether nearly doubled to $490 as the total liquidity across DeFi protocols quickly surged to $10 billion.

Ethereum developers said the upcoming Shanghai upgrade, slated for March, would add functionality to withdraw staked ETH, according to Bloomberg News.

Ethereum, the king altcoin, has been generating a lot of buzz lately. According to CoinGecko, the coin appreciated by 4.5% in the weekly timescale.