Ethereum: Will USDT, USDC hinder the future of The Merge?
The BUIDL ASIA 2022 conference kicked off in Seoul on August 4 and was attended by many leaders of the global blockchain market, including Ethereum founder Vitalik Buterin, NEAR Protocol co-founder Illia Polosukhin, and DSRV CEO Kim Ji – Yoon. .
The Ethereum founder, whose speech was one of the most anticipated, went on to talk about the future of the Ethereum base layer, the Merge upgrade, and L1-L2 coexistence, among other things. However, his opinion on how centralized stablecoins like USDC will determine the fate of a likely future hard fork of Ethereum has received a lot of attention.
According to Buterin, centralized stablecoins like USDT and USDC “may play an important role in the long-term hard fork dispute.” He further argued that such stablecoins would be “crucial” in deciding which blockchain protocol the community will respect during forks.
“At the time of the merger, you have two [separate] networks […] and then you have exchanges, you have Oracle providers, you have stablecoin providers making decisions in a way where one of them respects it.”
The Merge and stablecoins
With the upcoming Merge, there is a lot of talk about the implications of a potential ETH hard fork. However, it should be noted here that no official announcement has been made about the same and the community has only been speculating about the ‘what if’. In fact the same was mentioned in yesterday’s article.
According to crypto investment manager Galois Capital, stablecoin providers such as Tether and Circle will remain Proof of Work in the event of a fork on the Ethereum network. Justifying the said stance, Galois Capital said that errors in the new PoS network could lead to stablecoin liability and lawsuits. However, Tether’s Paolo Ardoino claims that
“It’s not about what I want between PoW/PoS. Stablecoins must behave responsibly and avoid interfering with users. “
In fact, he reiterated the fact that Tether plans to “support” ETH2.
Will things change in the future for Ethereum?
In fact, Buterin claimed at the conference that he “sees no indication” that any kind of conflict will be an issue in a future Ethereum merge. However, he said the same could be a problem in the future.
“I think it’s definitely going to be a bigger problem in the near future. Basically, the USDC’s decision on which chain to consider Ethereum could be an important decision in future controversial hard forks.
He further said that in the next 5-10 years, Ethereum may see more controversial hard forks, where centralized stablecoin providers may have more weight.
“At that point, maybe Ethereum’s foundation will be weaker, maybe the ETH 2 client teams will have more power, and maybe someone like Coinbase will run a stablecoin and buy one of the client teams before […] many such things can happen.”
For its part, the merger is one of the most important developments that the Ethereum network has to go through. The network is preparing for its final testnet merge to “merge” the Ethereum network. And if all goes according to plan, he added:
“… the mainnet merge will take place mid to late September.”