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In Starknet, contracts are divided into two parts: contract classes and contract instances. This division follows a similar concept used in object-oriented programming languages, where we distinguish between the definition and implementation of objects. A contract class is the definition of a contract: it specifies how the contract behaves. It contains essential information like the Cairo byte code, hint information, entry point names, and everything that defines its semantics unambiguously. To identify different contract classes, Starknet assigns a unique identifier to each class: the class hash. A contract instance is a deployed contract that corresponds to a specific contract class. Think of it as an instance of an object in languages like Java. Each class is identified by its class hash, which is analogous to a class name in an object-oriented programming language. A contract instance is a deployed contract corresponding to a class. You can upgrade a deployed contract to a newer version by calling the replace_class_syscall function. By using this function, you can update the class hash associated with a deployed contract, effectively upgrading its implementation. However, this will not modify the contract’s storage, so all the data stored in the contract will remain the same. To illustrate this concept, let’s consider an example with two contracts: UpgradeableContract_V0, and UpgradeableContract_V1. Start by deploying UpgradeableContract_V0 as the initial version. Next, send a transaction that invokes the upgrade function, with the class hash of UpgradeableContract_V1 as parameter to upgrade the class hash of the deployed contract to the UpgradeableContract_V1 one. Then, call the version method on the contract to see that the contract was upgraded to the V1 version. 
use starknet::class_hash::ClassHash;

#[starknet::interface]
pub trait IUpgradeableContract<TContractState> {
    fn upgrade(ref self: TContractState, impl_hash: ClassHash);
    fn version(self: @TContractState) -> u8;
}

#[starknet::contract]
pub mod UpgradeableContract_V0 {
    use starknet::class_hash::ClassHash;
    use core::num::traits::Zero;

    #[storage]
    struct Storage {}

    #[event]
    #[derive(Copy, Drop, Debug, PartialEq, starknet::Event)]
    pub enum Event {
        Upgraded: Upgraded,
    }

    #[derive(Copy, Drop, Debug, PartialEq, starknet::Event)]
    pub struct Upgraded {
        pub implementation: ClassHash,
    }

    #[abi(embed_v0)]
    impl UpgradeableContract of super::IUpgradeableContract<ContractState> {
        fn upgrade(ref self: ContractState, impl_hash: ClassHash) {
            assert(impl_hash.is_non_zero(), "Class hash cannot be zero");
            starknet::syscalls::replace_class_syscall(impl_hash).unwrap();
            self.emit(Event::Upgraded(Upgraded { implementation: impl_hash }))
        }

        fn version(self: @ContractState) -> u8 {
            0
        }
    }
}

use starknet::class_hash::ClassHash;

#[starknet::interface]
pub trait IUpgradeableContract<TContractState> {
    fn upgrade(ref self: TContractState, impl_hash: ClassHash);
    fn version(self: @TContractState) -> u8;
}

#[starknet::contract]
pub mod UpgradeableContract_V1 {
    use starknet::class_hash::ClassHash;
    use core::num::traits::Zero;

    #[storage]
    struct Storage {}

    #[event]
    #[derive(Drop, starknet::Event)]
    enum Event {
        Upgraded: Upgraded,
    }

    #[derive(Drop, starknet::Event)]
    struct Upgraded {
        implementation: ClassHash,
    }

    #[abi(embed_v0)]
    impl UpgradeableContract of super::IUpgradeableContract<ContractState> {
        fn upgrade(ref self: ContractState, impl_hash: ClassHash) {
            assert(impl_hash.is_non_zero(), "Class hash cannot be zero");
            starknet::syscalls::replace_class_syscall(impl_hash).unwrap();
            self.emit(Event::Upgraded(Upgraded { implementation: impl_hash }))
        }

        fn version(self: @ContractState) -> u8 {
            1
        }
    }
}
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