The Shanghai upgrade for Ethereum (CRYPTO: ETH), rolled out in April, hasn't spurred the anticipated surge in activity on the leading smart contract blockchain, according to a recent research report by JPMorgan.

The bank's analysis, which will likely be a topic of discussion at Benzinga's Future of Digital Assets conference on Nov. 14, highlights that despite the transition from proof-of-work (PoW) to proof-of-stake (PoS) reducing Ethereum's energy consumption by over 99%, the expected uptick in network activity hasn't materialized, CoinDesk reports.

The bank's report, spearheaded by Nikolaos Panigirtzoglou, states, “the increase in network activity has been rather disappointing.”

JPMorgan's findings indicate a 12% decline in Ethereum's daily transactions since the Shanghai upgrade. Additionally, there's been a nearly 20% drop in daily active addresses and an almost 8% decrease in the total value locked (TVL) in decentralized finance (DeFi) on the blockchain.

The bank suggests that the downturn in network activity might be due to the "bearish forces" of the previous year, including the downfall of Terra and FTX, U.S. regulatory actions, and a contracting stablecoin market, which might have overshadowed the positive effects of the Shanghai upgrade, according to CoinDesk.

Even though staking surged by 50% post the Shanghai upgrade, enhancing network security, JPMorgan expressed concerns that the "share of liquid staking protocols such as Lido remains uncomfortably high, raising questions about centralization."

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For context, The Merge, which took place in September 2022, marked Ethereum's shift from the energy-consuming PoW to the PoS consensus mechanism.

The Shanghai upgrade, introduced in April, facilitated the withdrawal of staked ether (stETH).

DeFi encompasses blockchain-based financial activities like lending and trading, while TVL represents the cumulative value of crypto assets held in a DeFi protocol.

JPMorgan analysts conclude with a more optimistic outlook for Ethereum, pointing to the potential boost in network activity with the forthcoming EIP-4844 upgrade or Protodanksharding, Coinbase reports.

However, the bank cautions that "continued bearish crypto forces remain a headwind."

The EIP-4844, also known as Protodanksharding, is slated for a launch in the last quarter of the year.

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