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Since we are using Cosmovisor, it makes it very easy to prepare for upcomming upgrade. You just have to build new binaries and move it into cosmovisor upgrades directory.
# Clone project repository
rm -rf paloma
git clone https://github.com/palomachain/paloma.git
git checkout v1.12.1
# Build binaries
# Prepare binaries for Cosmovisor
mkdir -p $HOME/.paloma/cosmovisor/upgrades/v1.12.1/bin
mv build/palomad $HOME/.paloma/cosmovisor/upgrades/v1.12.1/bin/
rm -rf build
Thats it! Now when upgrade block height is reached, Cosmovisor will handle it automatically!