The sci-fi sandbox game launched with model 2.0 shaders because Avatar wanted to make it as accessible as possible for as many people as possible, and because the team initially lacked DirectX experience. Now, though, Avatar has "reached the limits of shader model 2.0," and needs to upgrade the game in a visual sense without "going through significant hacks that reduce client performance and mess up the codebase."
Shader 3.0 is the answer, and the dev blog serves as a warning that the game's minimum hardware requirements will be changing. "As the vast majority of you have hardware that supports SM3, the change will only affect a handful of players," Avatar states.
