On Tuesday (August 9), Circle Internet Financial Limited — the issuer of fully-collateralized stablecoin USD Coin ($USDC), which was launched on Ethereum in September 2018 — made an announcement that made most Ethereum ($ETH) HODLers breathe a sign of relief.
Here is how Ethereum Foundation explains The Merge (expected to take place around September 19):
“The Merge represents the joining of the existing execution layer of Ethereum (the Mainnet we use today) with its new proof-of-stake consensus layer, the Beacon Chain. It eliminates the need for energy-intensive mining and instead secures the network using staked ETH. A truly exciting step in realizing the Ethereum vision – more scalability, security, and sustainability.
“It’s important to remember that initially, the Beacon Chain shipped separately from Mainnet. Ethereum Mainnet – with all it’s accounts, balances, smart contracts, and blockchain state – continues to be secured by proof-of-work, even while the Beacon Chain runs in parallel using proof-of-stake. The approaching Merge is when these two systems finally come together, and proof-of-work is replaced permanently by proof-of-stake.
“Let’s consider an analogy. Imagine Ethereum is a spaceship that isn’t quite ready for an interstellar voyage. With the Beacon Chain, the community has built a new engine and a hardened hull. After significant testing, it’s almost time to hot-swap the new engine for the old mid-flight. This will merge the new, more efficient engine into the existing ship, ready to put in some serious lightyears and take on the universe.“
On August 5, CoinDesk reported that TRON founder had recently said that “he will support development on the existing Ethereum network following the expected merge in September.”
The CoinDesk report went on to say:
“Developers say the move away from a proof-of-work (PoW) system will make the network much cheaper, faster and environmentally friendly. It will also mean the end of an income stream for Ethereum miners, who are rewarded with ether (ETH) tokens for supplying resources to the blockchain. Miners produced over $620 million worth of ether in July alone, data show, making The Merge akin to a death knell for a significant chunk of cash.
“That has prompted some prominent Chinese miners to propose a hard fork, so even as Ethereum undergoes The Merge and becomes validated by stakers, the miners will continue to support a newly separated PoW version of the chain – a move that could theoretically keep their financial activity intact.“
On the same day, Cointelegraph reported that “speaking at the BUIDL Asia event in Korea, Vitalik Buterin said that centralized stablecoins like USDC & USDT will become significant deciders in future hard forks” (and that “had not seen any indication” that this would impact the Merge hard fork (which is expected to take place next month).
And on August 6, popular pseudonymous crypto analyst “Hasu”, who is the Stratey Lead at Flashbots, took to Twitter to talk about this alleged attempt by some miners to create a new fork of Ethereum that uses PoW consensus:
He then added:
“a lot of hashpower does not give this chain any significant value… the chance that a major stablecoin will honor redemptions on this fork over eth2 is not 5%, its not 1%, its a cold zero. anyone who says otherwise is a grifter… if anything goes wrong with the merge, it just gets delayed until the problems are fixed and then the merge happens a few weeks later… no one in the eth community apart from miners want to stay on proof of work… this fork chain will be a giant retail trap. miners, exchanges, traders are all trying to talk it up for their own self-interested reasons…
“no one wants to use or build ethpow. i have studied the etc, bch, and bsv forks and these were actually dividing their respective communities. in all cases, their minorities were actual believers and not in it for a short-term trade. ethpow doesnt have 1% of that support… crypto is full of bad projects that only exist to dump on retail, but that doesn’t make it ok to support them. the fact that ghost chains like etc still exist does not vindicate that point… although most alt chains today are forks of ethereum, none has forked ethereum state. not because they didnt think of it but because its a completely stupid idea“
Well, earlier today, Circle published a blog post that stated that as the issuer of “the largest dollar-backed stablecoin issued on Ethereum” it plans to “fully and solely support the Ethereum proof-of-stake (PoS) chain post-merge.”
Circle went on to say that it is aware that $USDC has “become a core building block for Ethereum DeFi innovation” and that it has “facilitated the adoption of L2 solutions and helped broaden the set of use cases that today rely on Ethereum’s vast suite of capabilities.” Circle also mentioned that it accepts “the responsibility” it has for “the Ethereum ecosystem and businesses, developers and end users that depend on USDC,” and that it intends to “do the right thing.”
Circle also stated:
“As a result of our decision to support the Ethereum PoS chain post-merge, we do not anticipate disruptions to USDC on-chain capabilities nor to our fully automated issuance and redemption services… While we don’t speculate on the possibility of forks post Ethereum Mainnet merge, USDC as an Ethereum asset can only exist as a single valid “version.“
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