From small brokers to cryptocurrency exchanges and wallets, many participants in the crypto industry are gearing up for Ethereum’s transition to Proof-of-Stake (PoS) on September 15th.
Thus, one of the largest US crypto exchanges FTX announced that from September 7 it will suspend the deposit and withdrawal of ether (ETH) on the blockchains of Binance Smart Chain, Arbitrum One ETH and Solana ETH for the duration of the merger. The suspension will be valid until September 15, in connection with which the exchange recommended that traders plan their work correctly.
Bank of America experts noted that the network upgrade will be one of the most important events for the entire cryptocurrency industry, which is now in a protracted crisis. Ethereum 2.0 will open up more opportunities for working with collectible tokens (NFTs) and stablecoins, bankers are sure. According to the Ethereum Foundation, the PoS algorithm that the network will run on will reduce the power consumption of the blockchain by 99%, making Ethereum faster and cheaper to use.
At the same time, the Ethereum community itself is concerned about the silence of the regulatory authorities, which seem to be not going to take any steps in connection with the merger. The concern stems from the recent U.S. government sanctions imposed on cryptocurrency mixer Tornado Cash, as well as the blocking of its co-founders’ Github accounts.
Also, the crypto community is concerned about the so-called transaction censorship that may occur after the network transition. Many are afraid that large validators like Coinbase, for example, will be able to block transactions at the request of the government. However, Coinbase CEO Brian Armstrong said that in the event of threats from government regulators, the exchange will simply close ETH staking in order to preserve the integrity of the network. However, it’s not clear what other major platforms will do.
Not everyone is enthusiastic about Ethereum 2.0. One of the largest Ethereum miners in the Chinese ecosystem, Chandler Guo, announced that he plans to create a new ETHPoW minority network, which will become a kind of refuge for those who want to continue mining on PoW. According to CoinMarketCap, the daily trading volume of the future ETHW fork token has reached $1 million. Trading was launched by the MEXC, Gate.io and Poloniex exchanges. In this way, platforms and members of the Ethereum community can track the potential of a future fork. At the same time, no one yet knows when the fork will be carried out and whether it will be carried out.
OpenSea, the largest NFT trading platform, has officially announced that it will not support Proof-of-Work (PoW) forks after the Ethereum merger. The intention to support the merger was also expressed by Circle, the issuer of one of the largest USDC stablecoins:
“We are not going to speculate on the possibility of forks after the merger of the Ethereum mainnet. We believe that USDC, as a network asset, can only exist in a single valid version. We plan to only support the upgraded Ethereum PoS chain.”
The developers of the decentralized oracle network Chainlink take the same position. They stated that their decision is in line with the views of the Ethereum Foundation and the opinion of the Ethereum community. In contrast, the Binance exchange has announced that it will support both the main blockchain and all of its forks, as long as they comply with the exchange’s listing policy. The site promised to check these assets as carefully and strictly as everyone else.
How can you prepare for the merger
For starters, don’t believe anyone who says that you need to transfer your ETH from the old network to the new one or it will allegedly “burn out”. Especially do not believe those who benevolently offer to help you in this matter. No ETH2 exists, just like ETH1 – these are working names before the full merger, and after the transition, these terms will be abolished.
As a user, you don’t really have to do anything – just wait for the merge and use your ETH in your day to day operations. However, it is worth keeping an eye on the updates of the platforms that you use, as some of them may suspend the input and / or withdrawal of Ether for some period during the merger and after it. It is better to play it safe and not make any transactions at this time.
What promises the transition to PoS
Real Vision CEO Raoul Pal said in a recent interview that Ethereum’s transition to PoS will greatly increase the attractiveness of cryptocurrencies for investors, since the network itself is quite secure, and after the transition it will become faster and more accessible.
Ethereum co-founder Vitalik Buterin expects that after the merger, cryptocurrencies will again be used for everyday payments. According to him, payments in cryptocurrency fell out of favor in 2018 due to too high fees, but the transition to PoS can reduce fees to 5 or 2 cents.
Bits.media founder Ivan Tikhonov believes that the transition of the network to PoS is necessary. According to him, PoW is a great option for starting a project. However, when it grows to the size of Ethereum, which currently has a market capitalization of $193 billion, then we need to move on. The creators of Ethereum initially put the possibility of switching to PoS into the network, and no matter how many people disagree with this, this is inevitable.
In general, 2022 can be called one of the worst years for the cryptocurrency industry: the market sank by almost $1 trillion, and many investors lost their savings. Even such a mastodon as Coinbase had to lay off more than a thousand employees. Some did not survive this crypto winter at all. This is not to say that the financial and technological world is filled with romantics – zeros and ones are not particularly conducive to this – but the merger of Ethereum inspires hope. Everyone, from “hamsters” to millionaire hodlers, expects that the merger, if not pulling the market out of the hole, then at least reanimating it.
I am an experienced journalist, writer, and editor with a passion for finance and business news. I have been working in the journalism field for over 6 years, covering a variety of topics from finance to technology. As an author at World Stock Market, I specialize in finance business-related topics.